On February 26, 2015, Turkey enacted a long-awaited regulation of shopping malls in Turkey, regulating the establishment, operation and supervision of shopping malls.
Definition of a shopping mall
A retail sales operation will be considered a “shopping mall” if it has:
• a building or collection of buildings for retail sales; a shopping district or temporary establishment such as a bazaar is not deemed to be a shopping mall;
• a retail area of 5,000 square meters or more; and
• at least 10 stores, including one department store, or at least 30 stores if there is no department store.
Under the new regulation, a shopping mall must have:
• common areas, including the free-of-charge common area facilities required by the regulation; and
• centralized management.
Permits and licenses
During the permitting phase, a retail project satisfying items (a), (b) and (c) above is deemed a “shopping mall project”, even if it is a mixed-use project and has other uses on the site, such as residences or offices.
Construction permits, occupancy permits, and workplace opening and operation permits (including amendments and renewals) are granted by metropolitan municipalities in metropolitan cities, and local municipalities in non-metropolitan cities. If the shopping mall is located outside of a municipality, the permits are issued by special provincial administrations.
Applications for construction permits and occupancy permits for mixed-use projects are now submitted to metropolitan municipalities, rather than to local municipalities, as they were previously.
A shopping mall is granted an occupancy permit if it meets all of the minimum requirements, in addition to completion of the shopping mall construction in accordance with the construction permit. Unlike previous practice, under the new regulation, if the occupancy permit is issued, no further workplace opening and operation permit is required.
The new regulation requires minimum free-of-charge common area facilities for shopping malls:
• a social and cultural activity area equal to at least 0.5% of the retail area;
• an emergency medical intervention unit of at least 20 square meters;
• a baby care room on each floor of at least 10 square meters;
• sufficient playgrounds (but there is no guidance as to what constitutes “sufficient”); and
• segregated prayer rooms for men and women of at least 30 square meters in malls with a retail area of less than 100,000 square meters, and at least 50 square meters in malls with a retail area of more than 100,000 square meters.
Mall owners not complying with these requirements are subject to an administrative fine of TRY 21,116 to TRY 42,232 (~USD 7,200 to ~USD 14,400) for each square meter below the minimum required for common area facilities.
Common area expenses
Common area expenses, other than electricity, water, heating and maintenance expenses (i.e., repair, security, cleaning, etc.), are charged pro rata among the tenants as provided in the new regulation.
If services such as marketing and management which serve a common interest are charged to retail stores, the agreement between the mall and retailers must state this specifically. Unless otherwise agreed, these expenses are shared among the retailers as provided in the regulation.
No common area expense other than those listed can be charged to the retailers.
Allocation of space for artisans and craftsmen
Under the regulation, a portion of the retail area must be allocated:
• to artisans and craftsmen (at least 5%) for the fair rental value set by the mall owner; and
• to persons engaged in professions which are becoming “obsolete” and which have a traditional, cultural or artistic value (at least 0.3%) for one-fourth of the fair rental value set by the shopping mall owner.
Retail areas that are vacant once the regulation enters into force are to be first leased to the artisans and craftsmen described above until the minimum allocations are reached.
Outlet shopping malls
For a shopping mall to indicate that it is an “outlet,” all stores in the shopping mall must sell discounted items on an ongoing basis. This requirement does not apply to certain service-related businesses, such as cinemas, restaurants, barbershops, supermarkets and tailors. “Outlet” signs must be placed on the outside of the shopping mall’s building in a legible manner.
Actions to consider
Shopping mall owners should be aware how these changes may affect their operations in Turkey, and take steps to ensure compliance. Malls in operation as of the entry into force of the Law on the Regulation of Retail Trade (January 29, 2015) must install the required common area facilities and implement a centralized management system by February 26, 2017. Failure to do so will subject mall owners to an administrative fine of TRY 20,110 (~USD 6,900). The fine is doubled for repeat violations.
Retailers in shopping malls are entitled to require that their lease agreements with mall owners and managers are in conformity with the regulation and force shopping malls owners to comply with the minimum requirements.