Net lease glossary
Co-Tenancy Clause
A lease provision that reduces rent or allows termination if specified anchor tenants or occupancy levels at a center are not maintained.
A co-tenancy clause ties a tenant's obligations to the presence of other tenants. Opening co-tenancy requires named anchors or a set occupancy level before the tenant must open. Operating co-tenancy grants rent reductions, often to a percentage of sales, or termination rights if those conditions later fail. Co-tenancy is common for outparcel and inline tenants in shopping centers, and investors buying a pad site should check whether the tenant's rent depends on the center's health.