If A Neighboring Anchor Tenant Is Important To Your Business, Be Sure It Ends Up In The Lease

Many retail leases involve small tenants that are dependent on the foot traffic generated by a large "anchor tenant" in a retail shopping center.  (e.g. Vons, Target, Macy's, Home Depot, Best Buy, etc...)On multiple occasions, I have been hired by tenants or their former brokers as they sue each other and the landlord, because a tenant's business is failing after an anchor tenant has moved out.  In the most troubling instances, the landlord can't seem to find a replacement anchor tenant for months or years, and the small tenants discover for the first time that there is no way  to get out of the remainder of his/her 10-15 year lease commitment.

For those tenants that are dependent on foot traffic generated by a larger tenant in the same project, it is crucial that his/her lease includes language in the representations and warranties, in the condemnation clauses, or in a custom drafted lease section that confirms the tenant's right to terminate the lease if the key anchor tenant ceases operations in the project.  I have been surprised to learn that, with appropriate restrictions, many landlords will not oppose these lease revisions because they believe that the project will have failed by the time the tenant is able to exercise the right to terminate.  

Similarly, if an anchor tenant is not open at the time of leasing, but its opening is a material consideration for entering the lease, DO NOT rely on the oral representations of the landlord's broker or the landlord himself/herself regarding the opening date or that status of lease negotiations.  Negotiations with tenants can fall apart, businesses can fail unexpectedly, and the tenant that is reliant on foot traffic to stay in business can quickly find himself/herself financially tethered to a location that never had a chance of success.