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The Future of Small Stores in Big Malls Hangs in the Balance


All small business owners are worried about the future these days, but the ones whose fate is closely tied to that of large corporations have a special set of worries all their own.  With retail businesses first closed down to reduce loss of life and health in the COVID-19 pandemic, business owners hoped that they could resume their commercial activities as soon as possible.  Now that the early phases of reopening have become the focus of the public conversation, businesses in the DC suburbs of Maryland have decided to stay closed for a little longer even if the state government permits them to reopen.  The situation is even more complicated for the owners of small businesses that rent commercial spaces in retail malls.  A Maryland small business lawyer can help you find the best solution to this quandary.

Flagship Stores Clash with Landlords

Residential tenants who have been furloughed or laid off from work are not the only ones struggling to pay their rents.  Commercial tenants who are not allowed to conduct business at all, or who can operate only within stringent social distancing restrictions, are also experiencing the same struggle.  According to a report on Yahoo Finance, landlords collected only 15 percent of the money owed to them in rent payments for spaces in retail malls, and the prognosis looks even worse for May.  The crisis of retail malls predates the COVID-19 pandemic by many years.  As online shopping accounts for an increasing share of retail purchases, the price of rent has increased steadily.  It has increased 2.6 percent each year since 2017.  The cost of operating a flagship department store in a retail mall is becoming prohibitive.  This could mean that the trend toward the decline of the department store, and indeed the retail mall, could continue, or it could mean that rents in retail malls will get lower for large and small stores alike.

The fate of independently owned small stores in retail malls depends on that of the flagship stores.  People go to the mall to shop at a department store, but they also stop in at the nail salons, small clothing boutiques, and food court stalls owned by local small business owners.  This interdependence is so strong that some lease agreements for small stores in malls contain provisions that allow the tenant to get out of the lease without penalty if the flagship store closes.

If you own a small store in a mall, where does that leave you?  Should you close up your food court stall and invest in a food truck instead?  Where will you operate your business if your current mall location closes?  Part of making these decisions is discussing them with a small business lawyer.

Contact Us Today for Help

A business law attorney can help your small business regroup during uncertain times.  Our firm helps small business owners with everything from legal formalities to difficult decisions.  Contact the Washington DC small business law attorneys at Tobin O’Connor Concino P.C. for help.




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