It’s Deal Time

Retailers and developers talk a lot more these days.

The recession-driven business of shedding stores and adjusting leases is throwing landlords and tenants together, forcing them to sit eyeball to eyeball (or at least e-mail to e-mail) to hash out real estate strategies that both parties can hopefully live with.

Some liken the process to doing battle.

“Restructuring commercial real estate has morphed from fencing to hand-to-hand combat,” said Tom Mullaney, a founding partner of real estate and financial restructuring firm Huntley, Mullaney, Spargo & Sullivan, whose offices are in Roseville, Calif., and St. Charles, Ill. “Tenants who want to renegotiate leases in a way that really improves their profitability must go in swinging.”

From 2006 to 2008, HMS restructured 89 leases for OfficeMax and saved the retailer in excess of $102 million.

Over the last 12 to 18 months, chain retailers have closed hundreds of underperforming stores, restructured as many or more leases and curtailed growth; some 40 major chains have shut down entirely.

The result has been spiraling shopping center vacancy rates that have spawned some pretty evident trends in real estate disposition, among them an increasing number of non-retail tenants and a landlord hair-trigger when it comes to rent rate cuts. Among the key trends to take into account: