Protecting Your Protected Areas

July 2012

National retailers often require protections in their leases to preserve the visibility of their storefronts and signage, as well as to maintain clear access paths to their stores. These tenants seek to identify and protect the areas in front of their stores in order to allow prospective customers to see and enter their stores without distraction or obstruction. Some tenants go so far as to request that the landlord prohibit all kiosks, display carts, and any other obstructions in a designated area in front of the store. Sophisticated landlords, on the other hand, often object to giving up control over areas of their properties that are outside of the tenants’ premises and refuse to be hindered by numerous tenant restrictions. In fact, many landlords do not give any such protections to their tenants unless their tenants have sufficient leverage to demand them, as is often the case with major or anchor tenants.

Location is a significant factor in identifying issues and solutions. If the storefront abuts a public street or a dedicated public walkway, over which the landlord does not have control, there may be little that the tenant can do to protect their access and visibility. In these types of locations, a landlord will typically argue that since it has no control over public spaces, it has no obligation to provide a tenant with any protection, even to a limited extent. A compromise might be to provide that the landlord shall exercise whatever control it has, however limited, to enforce the tenant’s required protections, but the landlord will not be required to take extraordinary measures.

If the store is located within a multi-tenant mall or other location where there are common areas, other areas, or structures that the landlord controls, there is substantially more to consider. In these situations, the following concepts should be addressed:

Alterations: Scope of Protected Area

The tenant will request that the landlord not construct or permit anyone else to construct new structures or modify existing structures in a manner that obstructs the view of tenant’s storefront or signage or that hinders ingress and egress to the store.  Meanwhile, the landlord will want to preserve its right to alter its property, including buildings and common areas, in its sole (or at least reasonable) discretion.  These conflicting positions may not always be practical, so the parties will often agree on a designated corridor or a “Protected Area” that extends outward from the storefront where certain restrictions will apply. This Protected Area may be of varying dimensions depending on the size and location of the shopping center.

In a smaller center or interior mall location, the Protected Area might extend from the tenant’s storefront all the way across to the opposite tenant’s storefront.  In a larger center, the Protected Area may not extend all the way to the opposite building or storefront, but should, from the tenant’s perspective, allow for enough space such that there is not an actual or perceived impediment to visual site lines or access.  The Protected Area might also extend all the way to the street or highway when visibility or access is from that vantage point.  The landlord’s objective will be to make the Protected Area as small as possible, with the least amount of restrictions, and to require a certain amount of interference before a violation can be claimed.  Also, prudent landlords will reserve the right to recognize the rights of pre-existing tenants with respect to construction or signage and to make changes required by operation of law in the Protected Area, without liability to tenant.  Finally, Landlords will ensure that amenities such as trees, benches, light poles, or directories are permitted within the Protected Area.

Obstructions/Activities

Tenants request that landlords not allow any temporary or permanent obstructions, such as kiosks, carts, decorations, shopping cart corrals, or shopping center or other tenant signage, to be placed in the Protected Area.  Further, tenants seek to restrict the types of activities that can be conducted within the Protected Area, limiting things such as promotional events, outdoor sales areas, or restaurant seating.  This type of restriction might severely restrict a landlord’s ability to operate and promote its center.  Therefore, landlords seek some flexibility for temporary exceptions (for example, a specified limited number of days or hours) and minor deviations so long as tenant’s storefront, signage or access is not materially impaired and its business not materially interrupted.

Parking

If a center includes parking in front of the tenant’s store, that tenant may require that the landlord not change the number of stalls and may limit the landlord’s ability re-configure or re-locate parking spaces.  In some cases, tenants (particularly big box type tenants) may also require landlords to specifically dedicate and mark a number of parking spaces for their exclusive use.  Landlords may be willing to offer some assurance as to preserving existing parking, but will want to reserve their right to remove or relocate parking so long as they maintain the parking ratio required by code and/or provide alternative parking that reasonably serves the tenant and its customers.

It is important for tenants to conduct a careful site survey of the store location during the initial lease negotiation process, or even early as the LOI stage.  This allows the tenant to clearly identify any area(s) the landlord does or might control that the tenant considers critical to protect its visibility and access.  With this knowledge, the tenant and the landlord can agree on the scope of the Protected Area and the specific rights reserved to each party therein that will be incorporated into the lease.