Glossary

Co-Tenancy Clause

Updated June 2026

A co-tenancy clause ties your obligations as a tenant to the presence of other tenants in the same property. If a named anchor store or a set percentage of the center goes dark, the clause gives you relief — usually reduced rent, and eventually a right to leave. It exists because the value of a space in a shopping center depends on the foot traffic the neighbors bring.

Opening vs. ongoing co-tenancy

There are two kinds, and they apply at different points.

Opening co-tenancy sets conditions that must be met before you open or pay full rent at the start of the lease. A common form: the named anchor must be open for business, and the center must be at least 70 to 80 percent occupied, before your rent clock starts. If those conditions are not met, you may open at reduced rent, or delay opening entirely.

Ongoing co-tenancy applies for the life of the lease. The same conditions — an anchor staying open, an occupancy threshold holding — must remain true. If the anchor closes in year four, or occupancy drops below the threshold, your relief kicks in again, even though you have been paying full rent for years.

The remedies, and the catch

When a co-tenancy condition fails, the typical remedy is reduced or substitute rent — for example, paying a percentage of sales in place of base rent for a defined period. If the condition is not cured within a window, often 9 to 12 months, the clause usually escalates to a right to terminate or go dark.

The catch is that this relief is rarely automatic. Most clauses require you to notify the landlord within a set window of the triggering event and to elect your remedy. Miss that window and you keep paying full rent in a center that no longer delivers what you signed up for.

That is why co-tenancy is an obligation to monitor, not just a clause to sign. You have to know when an anchor goes dark at each location, know which lease grants relief, and act inside the window. Across a portfolio, that means watching neighbor occupancy you do not control — which is exactly where these rights expire unused.

For the operational side of triggering and tracking these rights, see the guide on co-tenancy clauses. Nova Foundry tracks each location's co-tenancy conditions and notice windows, so relief gets claimed instead of forfeited.