A co-tenancy clause is a lease provision, most common in retail agreements, that ties a tenant's rent obligations or occupancy rights to the presence and operation of other tenants at the property, particularly anchor stores. Under a typical opening co-tenancy requirement, a tenant may delay opening or defer rent until a specified anchor or minimum occupancy threshold is met. An ongoing co-tenancy clause, by contrast, allows a tenant to pay reduced rent, percentage rent only, or in some cases terminate the lease if an anchor closes or overall occupancy falls below an agreed level during the lease term. These clauses exist because smaller tenants rely on anchor-driven foot traffic to support their own sales, and losing that traffic can materially harm their business even though their own lease terms remain unchanged. For property owners, co-tenancy clauses introduce a form of income risk beyond simple vacancy, since a single anchor departure can trigger rent reductions across multiple leases simultaneously, making anchor retention a priority in retail asset management.
Further reading: Real Estate Investment Strategies for Accredited Investors in 2026
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