Weather or Not

Record-breaking frigid temperatures and snowfall from the recent polar vortex incursion have made unprecedented demands on the nation’s power supply. As some owners of shopping malls and retail centers have discovered, this has left large retail destinations more vulnerable than ever to blackouts, has damaged operational continuity and impacted the bottom line for businesses across the country. The impact has been particularly punishing in places like the Deep South that are not accustomed to, or prepared for, such harsh winter weather conditions.

While it is easy to treat this stress on existing infrastructure as a fluke, the reality is quite different. From the great Northeast Blackout of 2003 to Superstorm Sandy in 2012, millions of businesses have learned the hard way just how disruptive and costly a large-scale power interruption can be. And the headline-making disasters are only part of the danger — the Christiana Shopping Mall in Delaware experienced two significant blackouts in the 2013 holiday shopping season affecting sales at more than 100 stores during the busiest time of the year.

Landlords and tenants alike need to understand what steps they should be taking to prevent and prepare for power outages and emergencies and protect their properties, businesses and bottom lines.

Be prepared

Emergency generators are a logical and essential foundation of any emergency preparedness planning. But selecting the right generator(s) for your center is important, and understanding where to place those generators is vital. Installing generators in a basement or other area that might be prone to flooding is a common and easily avoidable mistake. Many generators require an uninterrupted power supply (UPS) to ensure that there is no gap between power interruption and generator startup. It is a good idea to seek the advice of a trained professional to determine which UPS solutions are right for your system and your property.

Plan ahead

While the presence of a generator can provide some peace of mind, it is really only the beginning of preparing for a blackout or other power emergency. For landlords, big questions remain: How are you going to communicate with tenants? Where are you going to get the fuel to keep those generators running? Shipping disruptions are also possible as power outages often disable gas stations, thus preventing delivery drivers from filling their tanks. Developing a detailed emergency preparedness and response plan that answers those questions and addresses those uncertainties is critical.

Secure your fuel supply

Because a generator is only as good as its fuel supply, preparing ahead of time for an uninterrupted source of fuel (even in the most dire emergencies) is essential. In a true emergency, lines of supply can be disrupted, and local and regional shortages are common — gas stations close, refineries are shuttered. It is wise to participate in a guaranteed fuel supply program with a provider that has the regional and national resources and relationships to stand by its fuel delivery promises. Also remember to plan for enough fuel and resources to operate not only generators, but also any vehicles you and your property require to continue functioning normally.

Establish lines of communication

For landlords and tenants alike, designing an effective means of communicating with employees, customers and professional partners during an emergency or power outage is important. Social media networks are an increasingly popular resource to disseminate information, and emergency notification services can be an effective way to get in touch with large numbers of tenants or employees.

Train and test regularly

The last thing a mall or retail center needs in an emergency is an unwelcome surprise. Minimize those chances by maximizing preparedness: Establish a maintenance program and test equipment regularly, and provide regular training to ensure that all personnel are familiar with existing emergency equipment and procedures. Review that equipment and those procedures regularly to ensure that they can meet the needs of the property and its tenants.

Read the fine print

The issue of extreme weather or other unexpected events does present a problem for fixed CAM (common area maintenance). A big storm or even an extended period of challenging weather is likely to exceed any kind of maintenance budget a landlord or shopping center owner sets, potentially leaving the tenants to do things themselves and pick up the extra costs. For this reason, retailers should ensure they are covered for these unexpected events during lease negotiations by asking questions like whether there is a back-up generator available, who will pay for the additional cost of gas for the generator and what happens if the landlord fails to provide these essential services. It is also important that every tenant checks with their insurance company before signing a lease — making sure that all potential liabilities are covered in the case of extreme weather or other unexpected events (and understanding who is responsible for handling them).

At a time when landlords and retailers are increasingly dependent on a fragile and extremely complex array of technologies and communication networks, any damage or interruption to that infrastructure can be extremely damaging — and extremely costly. In that context, understanding the basics of emergency preparedness (and putting those safeguards in place) to ensure that your mall or your business is able to keep the lights on is a comparatively small investment with a potentially dramatic and difference-making ROI.

Bob Kenyon is executive VP sales and business development at Taylor, Mich.-based Atlas Oil Company. Jim Bieri is principal of Detroit-based Stokas Bieri Real Estate, and a partner of the international retail real estate alliance, X Team International.