“If JJD wishes to avoid receiving a lower level of rent, it can choose to make inducements to attract additional anchor tenants or raise the overall occupancy rate,” the justices wrote.
The court underscored the broader context of co-tenancy provisions in commercial leases, noting their common use to protect tenants from reduced foot traffic and sales in underperforming malls. The ruling further highlighted that JJD retains control over occupancy rates and could take proactive measures to improve tenancy conditions.
Jo-Ann’s legal team lauded the court’s recognition of co-tenancy clauses as part of the lease framework, not a penalty. Meanwhile, JJD’s attorney, Jacob Sarabian, expressed disappointment, noting the difficulties landlords face in a shifting retail landscape, exacerbated by e-commerce and pandemic-era changes.
The case underscores a significant divide among California appellate courts regarding the enforceability of co-tenancy provisions, a point Jo-Ann’s counsel, Mark McKeen, previously highlighted.
