2C — June 22 - July 12, 2018 — Mid-Year Review — M id A tlantic
Real Estate Journal
By Caroline Hoffer, Barley Snyder When one door closes … A ttorney
retail store chains could l e av e mi l - lions of s/f of the mid- A t l a n t i c r e g i o n ’ s commercial real estate v a c a n t , W
hile the closure of beloved national and international
This year alone, Toys R Us has announced it will close its entire fleet of stores and companies like the Ascena Retail Group – the parent company of Ann Taylor, Loft, Dress Barn, Lane Bryant and Justice – have announced widespread store closures. This comes on the heels of major retailers like Sears, and Kmart continuing to announce rampant store closures. These sites are attractive because most of them are in high-traffic, high-density areas that often already have built-out infrastructure of roads, water, sewer and other
necessary attributes. That presents a strong opportunity for those looking for turn-key ready buildings or available (and under market value) real estate in highly visible areas. Whether a company wants to relocate its operations into that vacant building or demol- ish the building and start from scratch, there are a number of legal questions to ask first: What conditions and re- strictions burden the prop- erty? Most multiple-tenant properties are subject to op- erating and use covenants such as required operational hours, and days that could be
too restrictive for a potential new business. Use restric- tions limit allowed uses of the property and may create exclusive rights in favor of current tenants such as the right to operate a pharmacy, full-service restaurant or su- permarket. Restrictions often prohibit uses that create high parking demands or operate during hours that do not at- tract customers to the other businesses on the property, such as theatres, bowling al- leys and fitness facilities. If the building is part of a shopping center, what rights does the building or
outparcel occupant have in the shared areas? Leases and other agreements gener- ally address rights of all oc- cupants of a shopping center to use common areas such as parking areas and access drives, but may also restrict certain areas from use. Su- permarket and retail anchor tenants often have protected parking areas that are not available to other tenants of the center. What signs are permit- ted on the building or the property? An increasing number of municipalities are attempting to control signs in their communities by adopting very restrictive sign ordinanc- es, restricting items such as height and the amount of light a sign emits. The installation of a new sign will likely re- quire compliance with the cur- rent sign ordinance and may have a significant, adverse impact on the visibility of the proposed use. Leases and operating and use restrictions for multiple-tenant properties also could restrict the size and placement of signs. How extensively can the building be renovated? Times change. Even though the building is current on all of its permits and approvals, zoning and building regula- tions may have changed since its initial construction. Any new construction a new own- er does at the site will have to comply with the current regulations and building code requirements. What appears to be a turn-key operation could turn into an expensive rebuild to meet current build- ing codes and land develop- ment regulations governing storm water, landscaping, access and traffic controls. Every property is unique and will present different op- portunities and issues. If you are a developer or business owner looking to take advan- tage of some of this newly available commercial real estate and would like some guidance through the process, please contact me or any of the attorneys in Barley Snyder’s Real Estate Practice Group. Caroline Hoffer is a partner in Barley Sny- der’s Real Estate Practice Group with more than three decades of experi- ence in guiding commer- cial real estate clients through the development process.
forward-thinking companies likely already have started scouting these locations to see what kind of future business opportunities may be available at these sites.
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