The art of sweetening the deal: Tenant incentives are sweeping the retail world

Tenant incentives are sweeping the retail world as landlords are offering even more to get to ‘yes’
By Guelda Voien | May 23, 2017 11:30AM

Fitness-related retailers, like Lululemon are desired tenants in today’s retail climate now that store closings have rocked the industry

From TRD’s retail issue: Some of the recent statistics on retail leasing across the U.S. might sound a bit contradictory. Rents in many major markets nationally are still strong and in some cities, such as San Francisco, breaking records. At the same time, a record number of retail outlets shuttered in 2016, and a number of national legacy brands — bedrock American companies from Kmart to Sears — have closed a slew of stores and/or filed for bankruptcy protection.

With this kind of uncertainty in the retail world, landlords are increasingly turning to incentives to sweeten deals for cautious retailers, even on High Street strips. Lucrative incentive deals may include a period of lower rent at the start of the lease term, huge contributions to the tenant build-out and, sometimes, lower rent for the entire period in exchange for a percentage of total revenue. [more]