Hunton Retail Law Resource

Retail developers continue to experiment with new concept designs for creating a shopping environment that will bring consumers back to brick and mortar. Along this pursuit to deliver a more attractive retail experience, developers of open-air shopping centers have started lobbying for relaxed open-container ordinances that would enable patrons to explore their retail districts with an alcoholic drink in tow. 

Parsons Alley, an open-air shopping center in Duluth, GA, is an example where developers were successful at pushing through an open-container ordinance. Visitors of Parsons Alley can now carry alcoholic beverages purchased from the center’s dining establishments throughout the shopping premises. The concept is intended to generate a livelier retail experience and fortify customer channels among restaurants and neighboring retailers of the shared development.

Parsons Alley is not the only project to garner municipal support for easing alcohol regulations – Iowa City’s downtown district and upcoming Avalon (the Atlanta-suburb mega mixed-use project), are also effectively promoting similar open-container measures.

The municipal endorsements received by these projects, and the current level of developer interest, suggest that more retail centers may explore similar deregulation efforts. While this strategy has the opportunity to support re-tenanting vacant spaces, and encourage a spike in consumer traffic, retailers should pay attention to issues embedded in such an undertaking and the available protections.

Increases in tenant insurance obligations, and potential altercations prone to alcohol consumption, along with greater CAM charges (e.g., common area security, maintenance), are among the foreseeable economic consequences an open-container ordinance may create. Similarly, a change in ordinance may influence the customer and tenant mix that a long-term occupant is accustomed to, and these tenants should consider what impact this will bring on future business at that location.

Store tenants of developments pushing for a modification in alcohol ordinances should consider negotiating for appropriate cost pools that will fairly allocate any increased CAM charges to the tenant vendors supplying alcohol. Tenants wishing to preserve the character of their current common area should negotiate for protections against material changes. Looking forward, retail landlords are likely to continue experimenting with new strategies to drive up consumer traffic. Store retailers should carefully negotiate their expectations for premise use and tenant mix in their lease agreements, or consider shorter terms with flexible exit strategies.