The rise of e-commerce and the struggle many brick-and-mortar retail stores face is nothing new. Customers are increasingly choosing to shop for clothes, furniture and even groceries from the convenience of their own homes. More recently, however, this shift in the way consumers shop has given rise to new types of retail stores – small showrooms and “pop-up shops.” While showrooms are not entirely new concepts, purely digital companies are increasingly opening up physical showrooms where customers can see and touch merchandise before deciding to buy, while the actual transactions often remain online. Pop-up shops – another retail store model – allow retailers (often online or seasonal retailers) to have a physical presence for a limited duration to essentially test run whether a permanent store would be lucrative. Continue Reading From Digital to Physical: New Considerations for Retail Leasing with the Rise of E-Commerce into Physical Spaces
Most retail tenants desire to locate their respective businesses amongst other retail businesses in malls, retail shopping centers or other mixed-use centers. Therefore, when negotiating retail leases, some of the most heavily discussed provisions involve the tenant’s share of Common Area Maintenance (“CAM”) expenses. CAM expenses essentially determine how much money a tenant will contribute to the upkeep and maintenance of the surrounding shopping center owned by the landlord. Continue Reading Considerations When Negotiating Common Area Maintenance Costs in Retail Leases
E-commerce and online shopping are here to stay, but the explosion of new technology and the number of resources available to facilitate online shopping is an opportunity for retailers to embrace new ideas and concepts that will increase foot traffic to their physical locations. The store-within-a-store concept isn’t new, but the type of store-within-a-store retailers have conventionally seen is changing and bringing in new business. Continue Reading Retailers Should Ensure Flexibility in Lease Agreements for In-Store Partners
A local newspaper, The Desert Sun, has reported that downtown Palm Springs is in the midst of an economic revitalization. Locals have noticed an increase in foot traffic with the opening of several new stores (including Starbucks, MAC Cosmetics and H&M), and further development is planned. The city held a “grand opening” for the area in late 2017, and Palm Springs city council member Christy Holstege has even referred to a “Palm Springs renaissance.” Continue Reading Palm Springs Retail Revitalization Potentially at Risk
The Westside Pavilion—the 755,000 square foot, 1970s fortress-style mall located in West Los Angeles—has been put up for sale by its owner, Santa Monica-based REIT Macerich Co. Tom O’Hern, Macerich’s CFO, predicted that the property would likely sell within a year. And although the Westside Pavilion is facing many of the same systemic pressures that other malls are facing nationwide, those are not the only reasons the mall is up for sale. Continue Reading A Unique Situation for a Unique Asset
On August 21, 2017, New York Attorney General Eric T. Schneiderman announced that Simon Property Group settled claims that it used anticompetitive tactics to prevent development of competing outlet centers close to Woodbury Common center in New York. Leases with retailers at Woodbury Common included a clause preventing the retailers from opening another location within a 60 mile radius of the outlet center—a radius that encompassed the entire New York City area. Continue Reading Simon Property Settled with NY AG Over Outlet Centers Restrictions
It’s probably painfully obvious to companies in the retail industry and beyond that the old paradigm of the retail shopping center is being permanently altered by e-commerce, as well as changing consumer preferences. As the old-guard stalwarts of retail begin to shutter stores or fold completely, it is up to both landlords and existing anchor tenants to adapt to the changing landscape, or risk prolonged periods of high vacancy.
One of the areas which can hamper efforts to re-tenant spaces are the restrictive covenants contained in both declarations governing shopping centers and in anchor leases, put in place with the justification that such concepts are not retail-oriented or are parking intensive. As consumers move towards a more experience-based retail experience (i.e., restaurants, entertainment and fitness concepts), landlords may find their hands tied by such restrictive covenants when it comes to leasing vacant spaces. In light of this, landlord’s should be reviewing their restrictive covenants both in declarations and leases any time a lease is being amended, modified or renewed which may contain leasing restrictions.
Careful attention should be paid to those restrictions that can affect leasing to post-e-commerce era concepts, such as restaurants and small format fitness centers, both of which are becoming an increasing share of retail centers. Unless these issues are tackled head on, landlords may find themselves with vacant spaces for extended periods of time, which harms traffic to the shopping centers and, consequently, traffic to existing tenants. Landlords may find that tenants may be more willing to play ball on dropping these restrictions if they come to the realization that extended vacancies harm tenants more than the parking issues that these restrictions are intended to protect against.
The Santa Barbara City Council, in an effort to combat the retail malaise on State Street in Downtown Santa Barbara, has approved a pilot program that would streamline the permit and review process for potential commercial tenants. Continue Reading Santa Barbara City Council Strikes Back Against Retail Malaise
Retail developers continue to experiment with new concept designs for creating a shopping environment that will bring consumers back to brick and mortar. Along this pursuit to deliver a more attractive retail experience, developers of open-air shopping centers have started lobbying for relaxed open-container ordinances that would enable patrons to explore their retail districts with an alcoholic drink in tow. Continue Reading Developers Advocating for Open-Container Ordinances May Pose Issues for Retail Store Tenants
The Maui County Liquor Control Commission, which regulates licenses for the importation, manufacture and sale of alcohol within Maui County, has liberalized certain County rules on the sale of alcohol: holders of liquor licenses are now generally permitted to sell alcohol to customers 24 hours per day. Retailers had previously been restricted to selling alcohol during the hours of 6:00 a.m. to 11:00 p.m., while hotels were permitted to serve until 4:00 a.m. Under the new rules, both are subject to the same standards. Continue Reading In Maui County, It’s Five O’Clock Around the Clock