Like members of any close-knit community, shopping center tenants don't always see eye-to-eye with each other. When disputes develop, the role of mediator often falls on the shoulders of the landlord.
Given that large shopping centers employ hundreds or even thousands of people — and that tenants must sometimes compete for the attentions of shoppers — it's only natural that conflicts occasionally occur.
“Conflicts tend to arise simply because we're dealing with such a people-oriented business,” notes Julie Jones, a vice president of management at Chicago-based General Growth Properties Inc.
Common sources of complaint mall managers must deal with include trash disposal, unwanted noise and limited parking. Regarding noise, Jones cites the example of teen clothing retailers using “lively” music to appeal to young shoppers.
“For a lot of stores, music is what attracts the customer, so they like to crank it,” Jones says. But what if that quaint little card shop next door is trying to attract a different, quieter customer? Conflict can result.
This isn't to suggest tenant conflict runs rampant. “We really haven't seen major conflicts with our retailers,” notes Jodie McLean, chief investment officer for Columbia, S.C.-based Edens & Avant, a major owner of grocery-anchored retail centers.
When conflict does occur in the grocery-anchored sector, McLean notes, it tends to involve common area space, such as shopping carts that clutter parking areas or sidewalks.
Problems also arise where employees fail to use designated employee parking, which is typically at the back of the parking field.
“Those are things that are typically handled fairly quickly through our property managers,” McLean says. “Store managers are very receptive to that kind of feedback. It usually takes one or two phone calls and those conflicts are resolved.”
Look in the lease
Conflicts between tenants are rare unless one tenant is doing something that violates the lease, notes Stephen McDonnell, a vice president at Finard & Co. in Burlington, Mass. When that does happen, you can count on that tenant's neighbors to fiercely defend their own interests.
For example, tenants might complain if a toy store is putting bicycles out on the sidewalk to promote a sale, because the bikes block the sidewalk for other customers, McDonnell says.
On occasion, when shopping center tenants are selling similar goods, the “use clause” question comes up.
The use clause in the lease governs what a retailer can or cannot sell. If a retailer adds a new product that conflicts with another tenant's product mix, the manager simply refers to the lease and educates the retailer on its important clauses.
Grocery stores, for example, have been expanding product lines with new products and services ranging from pharmacies to flower sales.
This development has created greater potential for conflict with other retailers offering the same types of goods and services.
Whatever the dispute, the solution typically can be found in the tenant lease.
Lease provisions are designed to address specific issues such as parking and noise. As a result, the manager's role is educating store employees or a store manager.
“Ninety percent of the time, the employee of the store understands that and is cooperative,” Jones says. “Managers only call in district managers when a complaint has a tendency to be chronic.”
Isolated incidences do occur where conflicts can boil over to become heated and confrontational. General Growth had a situation at a mall property regarding enforcement of employee parking. An employee was upset about being asked to move her car. She ended up throwing her bag lunch at a mall manager. “That happens when you are dealing with a volatile personality,” Jones says.
The role the manager plays is to diffuse the tension, calm frayed nerves, and do everything possible to return the situation to normal. Jones notes that managers are trained not to escalate a situation by being inflexible.
Oftentimes, the best approach managers can take is to listen to a tenant's grievance and use common sense. “Sometimes people just need to vent, and unfortunately our people take the brunt of it,” Jones says.
Beth Mattson-Teig is a Minneapolis-based writer.
SIDEBAR: Peacemaking pointers
Detailed lease language and open lines of communication are two essential tools landlords use to avoid and resolve tenant disputes.
Landlords are typically proactive in addressing a tenant's rights and responsibilities in the lease. “Where it breaks down is that there is a lack of understanding about what is in the lease by employees,” says Julie Jones, a vice president of management at Chicago-based General Growth Properties Inc. That is when the general manager needs to step in and address the problem and educate employees.
“Very often the leases are so explicit it becomes a black-and-white issue,” says Stephen McDonnell, a vice president at Finard & Co. in Burlington, Mass. For example, each lease typically has a use clause. “If a tenant breaches the clause and is selling something that it shouldn't, then a manager's job is to enforce the rights of the other tenants,” McDonnell says.
At Columbia, S.C.-based Edens & Avant, prior to signing new leases all other leases at the center are reviewed for language that could cause conflict. “So by having good processes in place we can avoid those situations,” says Jodie McLean, the company's chief investment officer. “We also put a lot of attention on tenant mix, making sure we have a complementary mix so retailers are not cannibalizing the sales of another tenant.”
Ultimately, the key word for a property manager is communication. Building relationships with tenants and communicating with them openly helps to build a sense of credibility and trust. “If communication is open, and you listen to your tenants, things run pretty smoothly,” McDonnell says.