Why Retail Owners Are Adopting Shorter Term Leases

Craig Killman

Retail is becoming more focused on the shopping experience than ever before. While this has big implications for retail brands and operators, it also puts pressure on retail owners to adapt the physical space and curate tenant mixes that will drive consumer traffic. One new trend: Landlords have adopted shorter lease terms and fewer options for tenant renewals. With the rapidly changing retail environment, landlords want and need options to remain competitive.

“The landlords today have to understand who their customer is and their core customer, and once they figure that out, they have to make sure that the retailers that they have are relevant,” Craig Killman, EVP at JLL, tells GlobeSt.com. “A lot of landlords aren’t giving tenants options anymore because retail is changing so fast and they don’t want to give retailers control over their real estate longer than the foreseeable future. We are seeing a lot of trends where terms are getting shorter and there are no options. Landlords are paying really close attention to customer amenities outside of the retail shops, like soft seating, koi ponds and play areas. The landlord is aware that they need to give the customer a reason to hang out at the shopping center.”