Signage, Part 2: Retail Space

If you are a retail tenant in a regional or neighborhood shopping center, then naturally you want a prominent sign with your business name in front. A large and attractive sign helps customers find your store. Whether they are looking for you specifically or just browsing in a competitive retail area, a sign can help you stand out from the crowd.A landlord, however, may not share your vision. The goal for a landlord is to ensure that all tenants’ signs enhance the overall appearance of the shopping center. They want a certain degree of uniformity and aesthetic appeal to attract customers. Ideally, this will increase sales and percentage rent as well as the real estate value of the center.
Because a retail tenant and landlord may have conflicting points-of-view, clear and precise terms must be agreed upon in a retail lease.

Begin with the Landlord’s Form Lease

A good starting point for negotiations is the signage clause in the landlord’s form lease. This clause usually enumerates details regarding:

• Sign Construction
• Design Standards
• Signage Approval
• Maintenance
• Removal

A signage criteria package that expands on the clause may also be attached to the lease agreement. Be sure to read and understand this package.

In addition, you will likely need to provide graphic drawings of your intended signage including design, overall size, style, color, and an indication of where you plan to locate the sign. If you intend to use a neon or LED sign in the window of your store, this should also be stated up front and written into your lease.

Pole or Pylon Sign

The tall sign positioned by the street in front of a shopping center is called a pole or pylon sign. Typically, the name of the shopping center is at the top and a number of stores are listed on panels underneath. Depending on where a center is located—for example, at a busy intersection—there may be more than one pylon sign.

This does not mean, however, that the name of your store will be placed on a sign. There are usually more tenants in a center than there are panels on a pylon. Therefore, you will also need to make this part of your lease negotiations. If possible, negotiate for a panel closer to the top of the sign, which offers greater visibility.

If you do secure a panel on a pole sign, be prepared to pay for a number of costs including fabrication and installation, permits, maintenance, removal and a pro-rata portion of the sign’s utilities.

Temporary Signage

The language in a standard signage clause covers not only signs on the exterior or front facade, but also those inside and outside a store. As a retail tenant, you may want to display a sign in your store window or on a stand in front that advertises a specific promotion.

In this case, you and the landlord may agree to modify the signage clause so that you can display temporary signage for a specific period of time, such as during the holiday season. As with your permanent signage, a landlord will also likely insist that temporary signage be professionally designed and fabricated.

Getting the Sign Plan You Want

As a retail tenant, your best chances at negotiating the sign plan you want is before the lease is signed. At this time, the approved plan will only pertain to your sign’s initial fabrication and installation. Any future modifications will require compliance with the lease’s signage clause and criteria package as well as the landlord’s written approval.

 

The information contained in this article is general in nature and should not be construed as financial, tax or legal advice.  As with any financial or legal matter, consult your tax advisor and legal counsel.