Quote:
Originally Posted by Tropics
I find it hard to fathom they would sign that long of a lease on land that has such potential for redevelopment. I am 36 years old and would likely be dead before that lease would expire, I would have to imagine most of the people who post on this forum would be dead before that place could be redeveloped if they signed a lease to 2050.
That seems like an absurd time, working backwards that is like a lease exipring today that was signed in 1974. 38 years from now Westbrook is going to be 5 minutes from downtown in a city of 2-3 million people, you do not lock up that kind of real estate for that long.
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Leases have buy-out clauses so either party can pay to break the lease after the lease has been in effect for a certain minimum period.
This just happened in Vancouver. Eatons built their new store at Pacific Centre in the 1970's with a 99 year lease. A few decades later, Eatons goes bust and Sears buys the assets, and as successor they continue with the 'eatons' 99 year lease.
Cadillac Fairview figures out they can make more money with a higher-class tenant, so Sears is paid $125 Million to break the lease. Sears moves out, Cadillac Fairview will renovate the building, and Nordstrom will move in - paying much higher $ psf on a new lease.
Since Nordstrom doesn't need all 7 floors of the building, the basement will become an extension of the mall (more tenants at a higher $ psf), and the top 3 floors will become office space (also at a higher $ psf).