By: Adam J. Faiella
In recent years, retailers have begun to convert unused space in their stores, including the sales floor area, to warehouse and distribution operations for online orders as e-commerce has increased. This trend has accelerated in response to the surge of home deliveries during the COVID-19 pandemic, and many retailers are utilizing even more floor area, and sometimes entire stores, as fulfillment centers. Re-purposing vacant or unused space can aid brick and mortar retailers in competing with pure-play online merchants and help property owners prevent lease defaults and maintain healthy occupancy levels. Municipalities also benefit when the rent roll of a commercial tax ratable of any kind, especially a shopping center, is stabilized. However, retailers and their landlords need to proceed carefully because converting unused retail space to “dark stores” for warehouse and distribution could have land use implications.*
Recently passed legislation on Governor Murphy’s desk for enactment would require all new leases and lease renewals in New Jersey – both commercial and residential – to include specific disclosures regarding potential and past flooding. Similar disclosures would also be required to be added to the “Property Condition Disclosure Statement” for the sale of “any real property located in the State.” (A separate post on this law blog will summarize the bill’s impact on sale contracts.)