Tenant Leasing Illustrated
March 2016
Issue #50
Hello,

Kudos to my wife who, in a feat of astounding fortitude and perseverance, has put up with me for 25 years.

Commercial buildings do not always fare so well over time and in today's issue we look at how retail tenants can protect themselves when their landlord needs to perform work on the building and erects scaffolding and sidewalk sheds in front of their store.

Sincerely,
Alan
Alan Katz
Mintz & Gold LLP

Silver Anniversaries and Sidewalk Sheds
A few weeks ago, my wife Robin and I celebrated our 25th wedding anniversary.

(Yes, thanks for asking; we were married in the sixth grade, which explains our relative youth and vitality.)

February 2nd to be exact. Ground Hog Day. As I like to say, each year on our anniversary, Robin goes outside and, if she sees her shadow, she agrees to stay married to me for one more year.

Funny that she does not appreciate that imagery. Go figure.

I cannot think of too many other things that I have done for so long.

Negotiate commercial leases. Root for the Mets. Well, those are depressing examples.

Winston Churchill said "My most brilliant achievement was my ability to be able to persuade my wife to marry me."

Of course, when a different woman said to him "If you were my husband I would put poison in your tea", Churchill's response was, "Madam if you were my wife I would drink it."

I suppose that proves that you have to be lucky enough to find the right person and I count myself lucky every day.

Building owners do not have it so good and over time their buildings need some sprucing up, maybe some rehabilitation or perhaps conformance with local law requirements.

And one thing is certain; with construction comes scaffolding and sidewalk sheds.

Scaffolding is the structure of wooden planks and metal poles on the outside of a building used while repairing or cleaning the building and sidewalk sheds or "bridges" are structures erected over a sidewalk to protect pedestrians from falling debris.

According to a recent edition of Crain's New York, New York City has over 190 miles of sidewalk sheds and in some areas, such as the midtown district, these sheds cover 20% of the sidewalk space.

Much of the proliferation in sheds has to do with local laws that require fa├žade inspection and repairs that, along with the sheds, protect pedestrians from falling masonry. No doubt this safety feature has prevented countless injuries and saved lives.

But while scaffolding and sheds may be a necessary annoyance to any commercial tenant, they are particularly a problem for retail tenants, as the sheds block signage, take up valuable sidewalk space, limit sunlight and hurt business.

This would be bad enough if the sheds and scaffolding were temporary as contemplated, but that is not always the case. Reportedly, there is one shed at West 123rd Street and Lenox Avenue in NYC that has been up since 2004 (when it was only my 13th wedding anniversary!).

Some of this has to do with economics, since it can cost less to put up and maintain a shed than to actually do the work (Building Department violations notwithstanding), and some is based on an understaffed Building Department lacking enough inspectors to remove sheds and move construction along.

In any event, scaffolding and sidewalk sheds are a part of city life and for retail tenants it is essential that you protect yourself by raising the following seven points in your lease:
  • Obtain prior notice. Except in the case of emergencies, your landlord should provide prior written notice of impending work requiring scaffolding and sheds, allowing you to be prepared.
  • Provide for minimum interference. Include general covenants that the work associated with such scaffolding and shed must be based on demonstrated need or applicable requirements of law, and must be completed expeditiously to minimize interference with (a) your business, (b) visibility from the exterior of the Building and (c) access to your premises.
  • Demand lighting. Require that your landlord install lighting under the shed. Particularly once the sun goes down you will want the area in front of your store to be bright and appear safe to pedestrians.
  • Require minimum height. The scaffolding should be "double height" so that it is to the extent practicable above the sign band for your premises (i.e., the lowest portion of the bridge should not be lower than the top of your storefront sign) and should minimize obstruction of your storefront windows and the exterior view of your premises.
  • Limit landlord's signage but allow for your own. Except for such signage as necessary to meet safety requirements or applicable laws, or signage for you and other retail tenants, your landlord should not have the right to install signage or advertising on the shed in front of your establishment. There are companies that rent space on sheds for advertising and your landlord should not profit at your expense unless you consent or share in the profits.

    By the same token, your lease should allow you to place conspicuous temporary signage on the exterior portions of the shed located directly in front of your premises (in accordance with applicable laws and specifications as to size, color, etc.) so potential customers can easily find your store. These signs can be removed by you (after notice) a few days prior to the removal of the shed.
  • Address timing. If there is any scaffolding or shed as of the initial opening of your store, your landlord should be obligated to remove the scaffolding and shed by a particular date. You might want the right to delay your opening without penalty or to pay a reduced amount of base rent until such scaffolding and shed are removed, perhaps even a termination right if such obligation is not met by an agreed date. This will provide your landlord with a strong incentive to complete its work quickly, mitigate the effect on your opening and avoid eating into any "free rent" period.

    It is difficult without some leverage to place similar requirements on scaffolding and sheds erected later during the lease term, however we have seen leases that provide remedies in the form of proportional rent abatements after an agreed upon period of time (e.g., 120 days) if the tenant's business has been materially affected economically. More common is that some tenants are able, except as required by applicable laws, to place limits on scaffolding and sheds during peak seasons (e.g., October 15 to January 15).
  • Require compliance with laws. Your landlord should be obligated to install its scaffolding and sheds in accordance with all applicable laws.
"Some people ask the secret of our long marriage. We take time to go to a restaurant two times a week. A little candlelight, dinner, soft music and dancing. She goes Tuesdays, I go Fridays." Henny Youngman

As Henny often says "Take my scaffolding and sheds. Please." If that does not work, then best to follow the seven suggestions above.

Sidewalk Shed Designs of the Future
A number or municipalities have held contests to attempt to create more aesthetically pleasing designs for sidewalk sheds. These have generally not caught on, primarily due to cost. See below for some design contest finalists and perhaps the sidewalk sheds of the future.

About Us
Mintz & Gold prides itself on providing the highest quality legal representation often associated with large law firms with the attention and reasonable costs of a smaller law firm. Mintz & Gold's Real Estate Department has a national practice specializing in a broad range of commercial real estate law, with a particular focus on commercial leasing. We have extensive experience with respect to office, retail and shopping center leasing, and have represented major Manhattan landlords, national and multinational institutional tenants and national retail chains. Most of our attorneys practiced for many years at large institutional law firms before joining Mintz & Gold.

For more information regarding Mintz & Gold's real estate practice, click here.

For a list of representative transactions of Mintz & Gold's real estate group, click here.

For Mintz & Gold's website, click here.

Contact:
Alan Katz
katz@mintzandgold.com
Telephone: (212) 696-4848
Fax: (212) 696-1231

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