Rising Bankruptcies Are Forcing Retailers to Renegotiate Leases — What It Means for Landlords
Bisnow · 10 July 2026
TL;DR
Corporate bankruptcy filings in the United States rose nearly 12% year-on-year to almost 592,000 in the 12 months to March 2026, driven by persistent inflation, elevated interest rates, and shifting consumer behaviour. Retailers and restaurant chains are among the hardest hit, and one of their first moves in Chapter 11 restructuring is culling underperforming properties — either renegotiating rents downward or rejecting leases outright. Landlords have limited legal recourse: once a court approves a lease rejection, an automatic stay prevents them from acting against the tenant, and damage claims are capped at 15% of the remaining lease term. Larger chains, such as Saks Global, have used the process to shed two-thirds of their locations and emerge leaner. Smaller businesses face the same pressures but with far less negotiating power.
Our take
While this story is rooted in the US market, the dynamics are directly relevant to South African commercial landlords and retail property investors. South Africa's own retail sector is navigating a similar cocktail of sticky inflation, high interest rates, and consumers under severe financial pressure — with roughly 30% of credit-active consumers in arrears according to the NCR. Local business rescue proceedings under Chapter 6 of the Companies Act mirror many of the lease-renegotiation mechanics described here, giving distressed tenants meaningful leverage over landlords. For SA landlords — particularly those with exposure to mid-tier retail strips or standalone restaurant tenants — the lesson is clear: monitor tenant financial health proactively, not reactively. Early engagement when a tenant shows distress signals (missed payments, merchant cash advance arrangements, shrinking foot traffic) gives owners more options, including negotiating a consensual rent reduction in exchange for lease extension, or quietly marketing the space to replacement tenants. Investors eyeing distressed commercial assets should also watch for opportunities as weaker tenants vacate prime nodes, potentially allowing better-quality occupants to move in at reset rental levels.