'Market-Wide Distress Causes Finger-Pointing'

““We’re going to start seeing more defaulted mortgages, workouts and foreclosures relating to large retail properties or retail condominiums,” says Scharf.

NEW YORK CITY—This past spring, veteran real estate attorney Y. David Scharf, partner with Morrison Cohen LLP, noted the comparative lull in commercial real estate litigation, and predicted that we’d be seeing more activity related to retail tenancies. Come early 2018, and his forecast has been borne out. Nor does he anticipate much change in that forecast.

Retail-related lawsuits will take on one of two facets, Scharf sells GlobeSt.com. ”I expect there to be continued litigation like we saw  with Teavana”—in which an Indiana judge ruling in favor of Simon Property Group barred Starbucks from closing 77  Teavana locations in malls—“related to the no-go-dark provisions in many of these leases, because it is truly is the only option for a landlord—to try to enforce those provisions. And the tenants are desperate to get out. In my practice, we have seen retail owners looking at every opportunity, any potential basis to find a constructive eviction in some way, shape or form to claim a breach of the lease by the tenant.”