Decades of exorbitant rents and shady business practices have finally caught up with landlords around the country, who are now, according to Glossy, “scrambling” to keep their retail spaces filled.
“The landlords of major retail spaces have done their best to extract as much money as possible out of their tenants,” as well as “influence bankruptcy laws to favor their own companies,” the story says, explaining that, back in 2005, landlord-backed bankruptcy reform laws were passed that allow landlords to jettison tenants going through Chapter 11 proceedings.
While that ability “worked to landlords’ advantage in the short term,” those reforms are now biting them in the ass, as it’s left them with “empty storefronts across the country and no retailers ready to fill them.”
“The landlords have really shot themselves in the foot,” said one expert. “Watch what you wish for. They wanted to limit the time retailers had to make lease decisions during a bankruptcy, and now, with the fundamental change in how retail is operating, they’ve lost their tenants.”
And without the line of eager retailers ready to move into vacated space, they’ve resorted to formerly unthinkable ideas like investing partially in brands they rent to and offering DTC brands “favorable leases” in once-vaunted locations.
“It’s an interesting time to be in retail,” said the same expert. “There’s a convergence of bankruptcy reform, the fact that landlords can’t have the over-exuberant confidence to relet a store whenever they want, and retail having to rethink itself in many ways. Everyone will have to work together if retail is to become more stable.”
You can read more about it at Glossy.