Five Holiday Season Tips for Retail Landlords

The holiday season brings many desirable things to a retail center: a fresh holiday look, a sense of excitement and anticipation, and most importantly — more traffic and customers. Along with these benefits, the holidays also bring some legal and practical challenges for retail owners. The primary goal is to keep your center running smoothly and profitably. Forethought and preparation may avoid not only some coal in your stocking, but perhaps an unanticipated legal problem or lawsuit.

Below are five tips for retail landlords and property managers to consider as the holidays approach:

1. Giving Thanks for Crowds and Disabled Access Compliance. The holidays normally bring a retail center a marked increase in visitors, which may place a strain on facilities and resources. It also increases the chance that a visitor may encounter a barrier to access in violation of law. Store displays or aisles redesigned or moved to accommodate holiday displays or extra shoppers may impede disabled access. Failure to have policies in place that ensure accessibility during the holiday bustle, and employees trained to properly implement such policies, may invite a claim that impermissible barriers exist. Any such barriers to access may lead to a lawsuit. Drafting and updating the center's access policies, and having counsel or a Certified Access Specialist survey the center to confirm compliance can prevent headaches, complaints and unwelcome lawsuits when the calendar turns to the New Year.
2. A Menorah Lighting? Holiday Displays. Large and elaborate holiday displays and lighting are now commonplace as retail centers compete for shoppers' attention. Your hundred-foot tall red-nosed reindeer might make Clark Griswold proud, but your local municipality may not agree. Displays that do not comply with local requirements may have to be dismantled or subject the owner to fines. Live performances may require permits, be subject to additional regulations, or violate use obligations or restrictions in various leases. Review all local requirements that may be applicable, and check leases for the scope of permitted activities. It is also advisable to confirm whether the costs of holiday displays or advertising can be charged as common expenses and in what amount. The cost of extra center-wide advertising during the holidays is a common dispute between landlords and tenants.
3. Where is Santa's Spot? Time, Place and Manner Policies. Retail centers are always a focal point of expressive activities by political groups, proselytizers, solicitors and labor unions. This is even worse during the holiday season, when bell-ringing Santas and other attention seekers inevitably appear in great numbers. While California law generally requires commercial property owners to permit expressive activity at retail centers (see Robins v. Pruneyard Shopping Center (1979) 23 Cal.3d 899), owners may impose content-neutral "time, place and manner" restrictions on expressive activities. By these rules, which can account for a center's unique aspects and layout, owners can place reasonable restrictions on speech, including advance notice of expressive activity and controls on its location, volume, timing and conduct. They are a critical tool for owners to control such activities and may permit owners to seek damages for violation of the rules by disruptive conduct, as the Ninth Circuit held in The Retail Property Trust v. United Brotherhood of Carpenters, (9th Cir. 2014) 768 F.3d 938. (See our prior alert regarding this case.) Well-crafted policies promulgated in advance may also prevent a lawsuit from groups seeking to exercise free speech rights.
4. Temporary Tenants: Naughty and Nice. The holidays frequently bring additional tenants seeking short-term space for holiday-themed sales or services, or to take advantage of increased traffic. This provides landlords welcomed additional revenue for previously unused space, but there are pitfalls for the unwary. The inventory of short-term tenants may infringe on exclusive sales rights or interfere with tenant mix requirements. Shared expense percentages may be affected. Temporary structures may require permitting or interfere with access obligations. Owners should consider all of these issues and monitor existing lease requirements to ensure short-term occupants do not interfere with existing tenants.
5. Bob Cratchit's Day Off? Holiday Operating Hours. As retail competition grows, the traditional "Black Friday" push has become a race to open on Thanksgiving Day. "Day after Christmas" sales have become "Christmas night" sales while the figgy pudding still sits on the table. Although centers generally strive for uniform operating hours, some tenants might rather be closed during non-traditional times. Each particular lease will govern when and to what extent tenants must operate, so landlords should be familiar with those obligations to avoid an acrimonious or costly dispute. Irregular or uneven tenant operations may also cause customer confusion or animosity. Landlords should have a plan regarding operating hours during non-traditional times.