Is The Internet Killing Retail Lease Agreements?

Since the digital age began, models for computing the rent for retail spaces have remained basically unchanged: lease agreements provide for a base rent while high-traffic locations as in, for example, shopping centres, provide an additional component dependent on revenue.

Online commerce disrupts the commerce landscape

Physical retail spaces are currently losing business and revenue. It is becoming therefore more difficult for lessors to let retail spaces profitably.

The growth of online retail prompts the question of whether and how sales via the Internet should be accounted for in the computation of rent, both base rent and sales-based rent – for example, when goods are ordered on the Internet but retrieved from a specific store.