GeekWire reports that “the owner of a major shopping center south of Seattle is suing Amazon, alleging that the company attempted to terminate its lease for a proposed Amazon Fresh grocery store under false pretenses.”
The story notes that “according to the lawsuit, Amazon’s November 2022 termination letter said the company wasn’t satisfied with its ability to obtain permits required under the lease, and asserted that the landlord hadn’t provided a required waiver from a nearby Marshalls department store consenting to Amazon’s use of the building. The lawsuit alleges that Amazon ‘did not make commercially reasonable and good faith efforts to obtain the permits and approvals,’ and says the property owner ‘has performed all conditions, covenants and promises on its part to be performed in accordance with the terms and conditions of the Lease’.”
GeekWire points out that “Amazon is in a similar dispute in the Philadelphia suburbs with the owner of another proposed Amazon Fresh location. The landlord there alleges that Amazon has failed to pay the required rent. Lawyers for Amazon have reportedly filed a countersuit there, saying that the landlord hasn’t met the terms of that lease agreement.”
The lawsuits argue that what is really happening here is that Amazon is changing its approach to physical retail development, which prompted it to try to get out of signed leases. CEO Andy Jassy has conceded the first point, saying earlier this year that “Amazon was pausing the expansion of its Amazon Fresh grocery stores, amid broader cutbacks, ‘until we have that equation with differentiation and economic value that we like’.”
Amazon has some 40 Amazon Fresh stores operating around the country, but there are at least seven so-called “zombie stores” that have been largely built but are sitting unoccupied.
KC’s View:
One of these “zombie stores” isn’t too far from where I live, and when I drive by there, I can’t help but feel sorry for the other stores in the shopping center that are sitting there with an anchor tenant that is dragging them down instead of building them up.
I’m sure that Amazon isn’t worried about that. But I do wonder if it will see a lot more lawsuits from landlords over these empty stores, especially if the Seattle or Philadelphia suits are successful.
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