Retailers dip their toes with short-term deals

Number of leases shorter than 3 years more than quadrupled between 2016 and 2017

Sep.September 02, 2018 03:00 PM

138 Greene Street (Credit: Thor)

With so much turmoil in the retail market, tenants are increasingly looking to do short-term deals.

Figures from CBRE show that since 2016, the number of retail leases inked for shorter than three years has increased dramatically, the Wall Street Journal reported.

Retailers are using the shorter terms to test out new locations and see where rents will go.

“The obvious positive on the tenant side is that they can test the market,” CBRE research manager Michael Slattery said.

CBRE counted 13 short-term retail leases in Manhattan in 2016. But by 2017 that figure had more than quadrupled to 53 deals. And 2018 is keeping pace with last year, with 28 short-term deals inked through the second quarter.

Soho, which has been hit hard by vacancies, had the heaviest concentration of short-term leases.

These kinds of deals can help landlords fill empty spaces and generate buzz for their properties, but they do pose a problem when building owners go to refinance or sell.

But landlords’ flexibility with short-term deals is helping improve leasing activity.

“It used to be landlords would dig in and wouldn’t back off rent that much, but now there are deals getting done,” SCG Retail’s David Firestein said. “It feels to me that the market is bottoming out.” [WSJ] — Rich Bockmann

Related Articles

Brookfield Asset Management CEO Bruce Flatt

“We underwrite every investment like we’re going to hit a recession”: Brookfield CEO

Kitopi CEO Mohamad Ballout (Credit: Kitopi and iStock)

“Smart” kitchen and delivery startup raises $60M for US expansion

Cadre founder Ryan Williams and Allen Smith

Cadre brings on former Four Seasons CEO as president

AKS Capital Partners Managing Partners Aaron Appel and Walker & Dunlop CEO Willy Walker

Walker & Dunlop acquires Aaron Appel’s AKS Capital Partners

From left: Publisher and founder Amir Korangy, Editor-in-chief Stuart Elliott and VP of Corporate Development Yoav Barilan

TRD’s founders share war stories from over the years

As the years go by_A look back at 17 years of real estate history

A look back at 17 years of real estate history

Vornado CEO Steve Roth and 595 Madison Avenue (Credit: Google Maps and Getty Images)

Fendi, Berluti take over old Coach flagship at 595 Madison

From left: Authentic Brands Group CEO Jamie Salter, Simon Property Group CEO David Simon, and Forever 21 CEO Do Won Chang (Credit: Getty Images)

Forever 21’s biggest landlord could become its new owner