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.

Retailers should mark January 1, 2020, on their calendars. It’s the date R-22, a hydrochlorofluorocarbon-based refrigerant being used in roughly 50 percent of all HVAC equipment, is set to phased out. Most triple-net commercial retail leases provide that tenants are responsible for the maintenance of their HVAC systems. Continue Reading R-22 Refrigerant Phase Out Will Impact Most Retail Leases

On June 3, 2016, Hunton & Williams LLP published a video discussing a 2015 ruling by the National Labor Relations Board (“NLRB”) as it relates to the real estate industry, which fundamentally alters the joint-employer standard. The ruling has already been making waves in the retail industry as the NLRB seeks to apply the new standards to hold certain franchisors liable for the employment violations of its franchisees. The decision comes in an era of increased reliance on third party contractors and staffing agencies to fulfill companies’ staffing requirements and, with recent NLRB action, is being expanded to hold franchisors liable as joint-employers. Under the new standards, an entity can be held liable, as a joint-employer, for the violations of another if the entity retains to itself the ability to effect the terms and conditions of the other’s employees. Continue Reading Joint-Employer Liability and the Retail Industry

This week, the 10th Circuit Court of Appeals upheld a 2010 Colorado law (Colo. Rev. Stat. §39-21-112.3.5) requiring out-of-state retailers that do not collect sales tax from Colorado consumers to report transactions to state taxing authorities, in an effort to boost state “use tax” compliance. The Colorado statute requires out-of-state retailers to (1) remind consumers with each transaction that their purchase may be subject to state “use tax” laws; (2) deliver an “annual purchase summary” to any customers with transactions totaling greater than $500 in any year; and (3) annually report the transaction information to state taxing authorities. There is an exception for “retailers who made less than $100,000 in total gross sales in Colorado in the previous calendar year, and who reasonably expect gross sales in the current calendar year to be less than $100,000.”

Continue Reading Colorado Tax Law Determined Constitutional