Every net lease landlord dreads the call. The one where the tenant, say a retailer, informs the landlord that Amazon is killing it and it willneed a 25% rent reduction. And just likethat, the landlord comes face to face withthe reality that net lease is not that fabledasset class where all you have to do is sitback and wait for the rent checks to comerolling in. “Those landlords, who thoughtthis was a passive investment for 15 years,aren’t prepared to make a decision onsomething presented by the corporate tenant,” says Noah Shaffer, senior director ofasset management for Confidant AssetManagement.
In some cases, retailers aren’t even offer-
ing to negotiate with their landlords.
They’re just closing up shop.
“Retailers are failing,” Shaffer says. “This
BY MARIAH BROWN
is a real threat to net lease landlords. Not
only will landlords lose the rental income,
but they will also have to service the prop-
erty tax, utilities and insurance for the site.
Strong retailers are using this dialogue to
leverage and scare net lease landlords into
Net lease has long been the bread-and-
butter of commercial real estate. It is a busi-
ness model that covers most asset classes
and is notorious for being both recession-
resistant and excelling in bull markets as
well. “People use net lease for downside
protection. It is the bond market for the
CURRENT TRENDS IN
THE SPACE AND LARGER
ARE OFFERING UP BOTH
AND CHALLENGES TO