coronavirus

A Covid-Era Lease Break for Retailers Looks Set to Become Industry Standard, WSJ Reports

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  • Covid shutdowns prompted many landlords to offer struggling retailers percentage-rent leases — pegging monthly rent payments to a percentage of the tenant's monthly sales, the Wall Street Journal reports.
  • Those flexible leasing agreements allowed retailers to manage costs and have been particularly helpful for new retailers, the Journal reported.
  • Now brands are increasingly demanding percentage-rent leases, according to the report.

Once-temporary rent breaks for retailers are expected to become the new standard among landlords, even after pandemic restrictions end and shopping rebounds, the Wall Street Journal reported Tuesday.

Mall vacancies in the U.S. hit a record high in April as retail stores have struggled to stay open after Covid shutdowns. 

Retailers are searching for new ways to survive, prompting many landlords to offer percentage-rent leases — pegging monthly rent payments to a percentage of the tenant's monthly sales — in place of traditional, fixed payments, the Journal reported. 

Those flexible leasing agreements allowed retailers to manage costs and have been particularly helpful for new retailers, the Journal reported. Now brands are increasingly demanding percentage-rent leases, according to the report.

Read more about percentage-rent leases in the Wall Street Journal.

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