March 30 , 2009

The Retail Connection's Zimmerman

The Retail Connection's Zimmerman Commercial Real Estate News and Property Resource

Last updated: March 30, 2009  07:26am
The Retail Connection’s Zimmerman
Lately the industry is hearing more and more about retailers renegotiating their leases, or at least trying to go that route. Among the chains that have discussed doing so with landlords include Quiznos, Charming Shoppes, Williams-Sonoma and others. readers are seeing much of the same out there. When posed the question during last week’s Quick Poll, 88% of respondents said that these renegotiations are becoming the norm in the industry. Steve Zimmerman, managing director of brokerage at the Dallas-based Retail Connection weighed in on the situation that landlords are facing with retailers.

It’s absolutely the norm that retailers are asking for renegotiations of their leases almost across the board. What we have done on the landlord side is to listen, accommodate and help. But what we try to do is help them understand that it needs to be a win-win. If you want us to help, we want to know that you’re really doing everything you can. We like to look at their business plan and their financials. If they’re a franchisee, have they gone to the franchisor or the bank for help? What kind of rent reduction are you looking for and how long? You need to get really specific about it. We’re willing to do something if they’re willing to make it up on the back end or if you’re willing to give up some contingency clauses that will allow us to lease to someone else.

We’re willing to listen and help if we can, but they have to understand it’s a two-way street. There are a lot of them just sending out a form letter saying they want a rent reduction, when in fact, the particular store they’re asking for a reduction on is doing great.

Is it the norm? It’s really on a case-by-case basis. If they can substantially show that sales are down and they’re really getting creamed, as apposed to just trying to leverage what’s going on in the market, we’re willing to listen. But they have to show what’s happening in sales, what’s going on and their plan to make it better.