A co-tenancy clause is prevalent in the retail lease contracts like that of shopping malls.

It states that if the key or anchor tenants in a mall leave or vacate the space then the residual tenants can reduce the amount of rent that they pay.

The logic behind is that, the anchor tenants are big stores in malls which attract a huge number of people. Small stores benefit from this as the increased traffic also spills over to other stores in the same location.

As these big stores move out, a co-tenancy clause provides the small stores with protection in the form of reduced rent to compensate for loss of traffic. Landlords set certain prerequisite conditions in order to activate the co-tenancy clause.