I recently received a distressed call from a beauty salon owner who had just signed a ten-year lease on a full floor of retail space on a prominent avenue in midtown Manhattan. The store was on the second floor of a small retail/office building and boasted large windows that ran almost the entire width of the space. Immediately below his store was a chain restaurant with a prominent sign above its storefront.
This particular salon owner had owned several similar businesses in the City and knew what it would take to attract walk-in clientele. Shortly after taking possession, the salon owner installed neon signs on the windows with the name of the business. As is custom for these types of establishments, he also posted in the window photographs of styles that the salon offered. At the bottom of the stairs leading to the establishment, he had a prominent sign installed. As he had at his other stores, he had a small “A-frame” sign within the property line adjacent to the doorway to the stairs.
As in almost all commercial leases, his lease stated that when it comes to signage-landlord’s consent is necessary. The complaints from the building owner began shortly thereafter. The salon owner attempted to negotiate with the landlord and agreed to forgo the A-frame sign and later, even the neon sign. The landlord was not satisfied and demanded that he remove all photographic signs. Despite many futile attempts to come up with alternative signage-landlord’s consent was not forthcoming. Particularly onerous about these demands was the building next door also had a salon. The landlord in that building apparently did not have an issue with such signage and the competition had an unfair advantage. I was retained to help get him out of the lease. Unfortunately, he had a good guy guaranty that required six months’ notice. If he exercised the good guy guaranty, he would also lose a significant security deposit. This was all due to a fundamental misunderstanding during the lease negotiations. If I negotiated the lease for him, I would have insisted that he attach a rendering of his proposed signage (inclusive of material used and lighting) as an exhibit to the lease. Negotiating liberal signage-landlord’s consent language requiring the landlord to be reasonable is valuable but very difficult to enforce.
Luckily, in this case, I was able to negotiate a surrender with a waiver of the six month rent penalty and a return of the security deposit. As the market trend for rents was decreasing, it was in the landlord’s interest to turn the space over and get new tenants quickly.