Allow Limited Use of Sidewalk as Sales and Display Area

Issue to Negotiate

A small or medium-size retail tenant may want a right in its lease to use the sidewalk in front of its space from time to time to sell and display its merchandise. Should you give the tenant this right?

Owner's View

Ideally, you don't want to give the tenant the right to use the sidewalk as a sales and display area. Putting merchandise on the sidewalk could hurt your center's appearance, making it less inviting to customers and prospective tenants. Plus placing objects on the sidewalk could hinder the flow of traffic—causing your other tenants to complain. And if someone gets hurt in the sidewalk's sales and display area, the injured party could sue you. That's because the sidewalk is part of the common areas, which you're required to maintain.

Tenant's View

If the tenant pays percentage rent, it may argue that using the sidewalk as a sales and display area will benefit you. Why? Because increased sales will mean more percentage rent for you. Plus the tenant may claim that it plans to use the sidewalk area for brief periods of time and only a few times per year—say, for its end-of-season sales.

Compromise: Place Limits on Sidewalk Use

If you're willing to compromise with the tenant, New York City attorney A. Barry Levine suggests using this approach: Say in the lease that the tenant can use the sidewalk as a sales and display area, but with certain limits. Here are eight limits that you should impose on the tenant's sidewalk use, says Levine. There's a Model Lease Clause on p. 6 that includes these limits, which you can adapt and use in your leases.

Allow sidewalk use only during certain times. Don't give the tenant free reign on when or how long to use the sidewalk for sales and displays, says Levine. Otherwise, the tenant might decide to use the sidewalk more often and for a much longer time than you expected, and you would lose control of the sidewalk. So let the tenant use the sidewalk only for short, specified times, he says. For example, his owner-clients let their tenants use the sidewalk no more than four times per year and no more than four consecutive days at a time. Also, require the tenant to give you prior written notice of its intention to use the sidewalk, he adds [Clause, par. a(i)].

Allow sales and display of only certain merchandise. Since the sidewalk isn't part of the tenant's space, the tenant's lease probably doesn't address what the tenant can or can't sell or display on the sidewalk. But don't let the tenant use the sidewalk as a means to sell and display whatever it wants, says Levine. Say that the tenant can sell and display only merchandise that's authorized by the lease [Clause, par. a(iii)]. So, for example, if the lease doesn't authorize the tenant to sell and display fruit and vegetables in its store, it can't sell and display fruit and vegetables on the sidewalk, either, Levine explains.

Require chain tenant to conform sales and displays to other locations. If the tenant is part of a chain, say in the lease that the tenant can sell and display on the sidewalk only the same merchandise that's sold and displayed at its other locations, says Levine [Clause, par. a(ii)].

Require orderly sales and displays. To preserve the appearance of your center, require the displays to be kept neat and clean, says Levine. And require that the sales and displays be orderly, he adds [Clause, par. a(v)].

Restrict sales and displays to a portion of sidewalk. Don't let the tenant use the entire sidewalk next to its space, says Levine. That will seriously affect customer traffic at your center, he explains. Instead, limit how much of the sidewalk it can use, he says. For example, say that the tenant can use only the sidewalk directly in front of and contiguous—that is, connected—to the space, says Levine. This prevents the tenant from using the sidewalk in front of any other tenant's store, he explains. Also say that the tenant can't use more than a portion of that sidewalk area. Levine recommends no more than half the depth and half the length of the sidewalk [Clause, par. a(iv)].

Bar interference with customer traffic. Make the tenant agree not to let its sales and displays interfere with customer traffic at your center, says Levine [Clause, par. a(vii)].

Ban sidewalk usage during holiday time. Because customer traffic at your center will greatly increase during the end-of-year holiday season, ban the tenant from using the sidewalk as a sales and display area at that time, says Levine [Clause, par. a(viii)]. The sidewalks must be kept clear to accommodate the increased customer traffic. Plus you don't want the tenant's displays interfering with your holiday season displays in the common areas.

Don't allow signs or banners without your consent. Don't let the tenant put up signs or banners over the sidewalk without getting your written consent, says Levine [Clause, par. a(vi)]. This lets you ensure that signs and banners will meet your center's requirements.

Practical Pointer: Give yourself a method of enforcing the limits in your lease clause. Have the clause say that if the tenant doesn't comply with your limits on the sidewalk's use, you'll terminate its right to use the sidewalk as a sales and display area after giving the tenant notice to that effect, says Levine [Clause, par. b]. As a result, the tenant would have to immediately dismantle its sales and display area in the sidewalk and would be barred from using the sidewalk again, he explains.

CLLI Source

A. Barry Levine, Esq.: 320 E. 23rd St., New York, NY 10010; (212) 477-5118; blevine2@nyc.rr.com.