Grocery Store Business Broker · HedgeStone Business Advisors · Jason Taken
Last updated 2026-09-04
Co-tenancy clause — Lease language that cuts rent or allows termination if a named anchor goes dark or if occupancy falls below a stated threshold. A grocery can be the remaining tenant who suffers, or the named anchor whose closing triggers other tenants’ rights. Read which side you sit on.
Walk the center with the lease in hand and mark every named tenant. Grocery Store Business Broker — HedgeStone Business Advisors, led by Jason Taken — treats co-tenancy as occupancy risk, not as boilerplate. Book a confidential intro with the lease and a current occupancy map. Email jason.taken@hedgestone.com if you want that hour. How do I evaluate the lease? opens lease due diligence.
Independents in a strip often take protection: if a named drugstore, junior box, or second grocer goes dark, rent drops to a stated dollar or to a percent of sales, or the tenant may terminate after a cure period. That is the grocery as beneficiary. The same supermarket can be the named traffic generator in everyone else’s lease. If you go dark — or if a buyer looks like a dark risk — those tenants may claim their own relief. Assignment diligence has to say which side you occupy.
Exclusive use is a different paragraph. It keeps another tenant from selling your category. Co-tenancy is about who is open, not about who sells milk. Do not read one and skip the other. Lease assignment is the transfer. The landlord’s standard — reasonable consent, financial tests, use tests — sits next to co-tenancy because a weak assignee can trip the center.
Read the remedy. A temporary rent cut is not a termination right. A termination right is not a refund of CAM. Cure periods and replacement-tenant language matter: some clauses go quiet if the landlord delivers a comparable occupant in time. Some name a specific banner and stay broken if a different use fills the box. Write what you found into the LOI so the price assumes the occupancy you actually have.
If the grocery is the only reason the strip stays leased, the landlord may fight assignment. Bring a buyer who can keep the box open and a recast the landlord can believe. Short remaining term with no options is a diligence cut even when co-tenancy language looks helpful. Can I sell if my lease is ending? and selling with a lease versus real estate are the term questions.
A dark neighbor can raise your CAM share while a co-tenancy clause cuts base rent. Price the stack: base, CAM, tax, insurance. FMI’s 2025 supermarket sample shows $19.59 in weekly sales per square foot of selling area and a 2.1 percent average net profit for food retailers. Occupancy sits on that thin net. A recon that assumes a full lot is not the recon you will pay if the junior box is plywood.
Triple-net does not save you from a dark-center CAM. Recast SDE at the occupancy in front of you, not at the year the site plan was full. If you have the lease and a map of who is open, book the co-tenancy conversation. Bring named-tenant pages, the last CAM recon, and last year’s sales. The hour is for which side you sit on, not for a clause nickname.
Use this napkin recast on Co-tenancy risk on a grocery lease when you book the call. It is labeled illustrative. BizBuySell's 2025 grocery sold-business earnings multiple averaged 3.38, with a 2021-2025 IQR of 1.60-3.15.
| Input or output | Illustrative figure |
|---|---|
| Weekly sales (illustrative) | $228,000 |
| Annual sales | $11,856,000 |
| Recast SDE | $486,096 (4.1% of sales) |
| Inventory at cost | $741,000 (~16 turns) |
| Occupancy check | $343,824 / year (2.9% of sales) |
| Low going-concern | $1,786,106 at 2.15x SDE + inventory |
| High going-concern | $2,126,374 at 2.85x SDE + inventory |
| Sketch DSCR on a note | 1.52 |
Rent at 2.9% of sales is the occupancy check. If the real lease is higher, the SDE in this table is too generous until you recast to market rent.
Book the intro call with your side of the table ready: seller files or buyer capital. The calendar is the only next step.
Print these, mark them up, and bring the marked copy to the intro. They are educational. They are not a valuation letter and not a listing. All downloadable guides.
Have the file ready so the hour is a recast, not a scavenger hunt. Then pick a time.
Get a specialist on the other side of the table
Grocery deals turn on licenses, inventory, and a recast a lender will believe. Book the intro and bring the file.
Book an Intro Call With Jason TakenIt cuts rent to a stated amount or percent of sales, or it lets the tenant terminate, if a named store goes dark or occupancy falls below a threshold. Read the remedy, the cure period, and who counts as the named tenant.
Either. Independents in a strip often take protection if a drugstore or junior box leaves. The grocery can also be the named traffic generator for everyone else. Assignment diligence has to say which side you occupy.
Often no. Rent relief and CAM are different paragraphs. A dark box can raise your CAM share while a co-tenancy clause cuts base rent. Read both against the occupancy map.
If the supermarket is the reason other tenants stay, the landlord may treat a weak assignee as a threat to the whole center. Bring a buyer who can keep the box open, and read the assignment standard before you celebrate the LOI.
Start a confidential grocery conversation
Whether you are exiting or acquiring, pick a time and we will talk through the file.
Book an Intro Call With Jason TakenThis page is educational information from Grocery Store Business Broker (HedgeStone Business Advisors). It is not legal, tax, or investment advice. Licensing, tax, and financing rules vary by state and deal. Confirm every item with counsel and your lender before you sign.
Ready when you are. Jason Taken will talk through the file.
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