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Retail Landlord Troubles Persist: Retailers Push For Shorter Leases

Brent Cross

Retailers are pushing for shorter lease terms when it comes time to renew as the industry responds to bankruptcies and thousands of store closures.

Instead of the typical five- or 10-year leases, retailers are negotiating one- or two-year leases in an attempt to stay nimble in an industry that is experiencing major turbulence lacking visibility, Bloomberg reports. The head of A&G Realty Partners, Andrew Graiser, told Bloomberg he is seeing a trend toward short-term renewals, and said landlords are looking at retailers with a closer eye than they historically have. The excess retail real estate on the market is not helping matters. Overambitious pre-recession expansion plans have been eating away at retailers' sales for some time now, leading to store closures and further exacerbating challenges for landlords. 

Cushman & Wakefield Vice President of Americas Retail Research Garrick Brown said between 9,000 and 10,000 U.S. stores will close this year, and projected that number will rise to around 13,000 next year. While short leases can help retailers respond quickly in today’s environment, the Journal reports, they present another hurdle for landlords trying to keep properties filled.