REALTOR® Magazine-Daily News-Struggling Retailers Ask for Rent Cuts

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Daily Real Estate News | July 10, 2009 | Struggling Retailers Ask for Rent Cuts
Major retailers are studying their leases, looking for loopholes that will allow them to demand rent cuts or to pull out of their contracts altogether.

Gap Inc., Williams-Sonoma Inc., Ann Taylor Stores Corp., and Chico’s FAS Inc. have been some of the most aggressive major retailers seeking opportunities to renegotiate multi-year rental reductions, according to real estate research firm Reis Inc.

Chicos has saved $81 million so far via rent-relief negotiations. Charming Shoppes Inc., including Lane Bryant and Fashion Bug, will save about $10 million this year in rent relief, Reis says.

Declining retail operations are hard on property managers.

"Today, when you're running a retail portfolio, it's death by a thousand cuts," says Glenn Rufrano, chief executive of Centro Properties Group, which owns 622 shopping centers in the U.S. and 122 in Australia and New Zealand. "You could have a pure vacancy, a bankruptcy and liquidation, tenants asking for rent relief, or co-tenancy cuts because of the loss of a major tenant."

Source: The Wall Street Journal, Elizabeth Holmes, Vanessa O'Connell and Kris Hudson (07/09/2009)