In partnership with
For many owners, vacancy feels like the enemy. It feels like weakness, risk, and lost income.
A full center, on the other hand, feels safe.
Predictable.
Stable.
But here’s the uncomfortable truth:
**Vacancy isn’t the enemy. Poor tenancy is.**
And in today’s retail environment, where expenses are rising faster than rents, consumer behavior is shifting, and tenant margins are tightening, the wrong tenant can quietly drain more NOI than an empty space.
Let me explain.
🧠 The Cost Owners Never Calculate
Most owners look at vacancy and immediately think:
Lost rent
Downtime
Leasing costs
TI exposure
All valid concerns.
But what they don’t consider are the hidden costs of a poor tenant:
Low rent that drags down NOI
Below-market leases that cap future upside
Unpredictable payments
High maintenance requests
Conflicts with neighboring tenants
Lack of traffic generation
Brand misalignment that weakens the center
And the biggest one: They block a better, higher-paying tenant from ever coming in.
Vacancy is temporary.
A bad tenant can hurt you for 3, 5, even 10 years.
📉 How Bad Tenants Hurt NOI — The Real Numbers
Let’s use a simple example.
Your 2,000 SF unit is leased to a legacy tenant paying $16/SF, far below today’s market of $24/SF.
What it costs you each year:
Rent loss: $16,000
Value impact at a 7% cap: $229,000
Higher CAM burden: if they’re inefficient
Risk of delinquency: common with struggling operations
Drag on co-tenancy: lowers appeal for stronger tenants
Opportunity cost: the highest invisible cost
And if that tenant is late often, requires constant communication, or struggles with NNN increases, the total impact is even larger.
Suddenly, vacancy doesn’t look so scary.
🔍 The Truth That Challenges the Old Belief
Owners fear vacancy because it’s visible.
But the problems that hurt centers the most are almost always the ones that stay hidden:
Under-market rents
Unhealthy tenant financials
Occupancy cost ratios over 15–20%
Tenants resisting NNN adjustments
Tenants who don’t drive traffic or spend on their space
Lease terms that lock you in for years
Most of the time, the center with the worst long-term performance is the one that stayed “full” for too long — with the wrong mix of tenants.
🧭 The New Belief: Stability Comes From Quality, Not Quantity
The best owners I work with understand a simple concept:
A short-term vacancy can create long-term stability.
Because vacancy gives you:
A chance to reset rents closer to market
A chance to improve your tenant mix
A chance to bring in tenants who can absorb NNNs
A chance to protect NOI over the next decade
A chance to upgrade the center’s identity
Vacancy is space.
Space is opportunity.
Opportunity is leverage.
And in today’s market, the owner who understands this wins.
📅 If You’re Worried About a Vacancy Coming Up…
Let’s walk through it together.
Sometimes the right move is renewal.
Sometimes it’s a strategic reset.
Sometimes it’s repositioning.
If you have a lease rolling in the next 6–12 months and want clarity, I’d be more than happy to walk through it with you.
👋 Until Next Week
Thanks for reading. You’re always welcome to reach out with any questions or anything you need to better understand your investment. I’m here to help you make well-informed decisions with confidence.
— Ray Kang CCIM
Strip Center Investment Sales & Advisory
The Smartest Free Crypto Event You’ll Join This Year
Curious about crypto but still feeling stuck scrolling endless threads? People who get in early aren’t just lucky—they understand the why, when, and how of crypto.
Join our free 3‑day virtual summit and meet the crypto experts who can help you build out your portfolio. You’ll walk away with smart, actionable insights from analysts, developers, and seasoned crypto investors who’ve created fortunes using smart strategies and deep research.
No hype. No FOMO. Just the clear steps you need to move from intrigued to informed about crypto.