During the current COVID-19 pandemic, fewer rents are being paid, and landlords no longer hold the cards. In a recent interview with Scott Simon of NPR, Robert Fransen is taking it easy on his commercial tenants. While the government is slowly reopening the economy, business is slow, especially for companies that are tagged to be non-essentials. Robert Fransen is a commercial landlord who operates a number of retail properties. According to him, only 50% of his tenants were able to pay rent in May. It was even lesser in April when only 30% paid their rents.
As a commercial landlord who owns shopping centers, restaurants, and retail properties, Robert is taking it easy with his tenants. This is because he understands that business is slow, and losing a tenant is not a great idea at a time when many businesses are looking for opportunities to minimize their expenses. Georgia, where Simon owns his commercial properties, is one of the first states in America to allow the reopening of business. Landlords in other states can only fear for the worse if business owners decide to cancel their leases or decline to renew.
According to an article on the New York Times, a group that represents about 3,000 landlords reported that its members who have commercial tenants experienced low rent collection, with only one-thirds of the tenants paying in April and May. This is a serious situation for commercial landlords. A major commercial landlord in New York City, Vornado Realty Trust, reported that nearly all their retail clients have sought financial relief, such as a deferral on rent payments. Its CEO already fears that tenants may vacate their spaces. Already, investors are being warned about the uncertainty in the commercial real estate market.
In cases like the one Richard is experiencing in Georgia, landlords may begin to apply the same tactic that he is employing with his tenants. He decided to work with his tenants in a way that eases their rent and help them adapt their businesses to the pandemic.
By and large, corporate tenants will have the upper hand when negotiating office spaces as landlords face a great amount of uncertainty in the aftermath of COVID-19 pandemic. This is because many business owners are now looking for ways to safeguard the health of their employees while maintaining business operations.
This implies that commercial tenants can now negotiate terms that favor them. These lease terms include CAMs as well as flexible rent payment. Commercial landlord, Richard, is already helping his clients with physical improvements in addition to expanding their patios to enhance social distancing. For the first time in a long time, tenants now have a unique opportunity to negotiate all the perks that ensure the smooth running of their businesses.
To take advantage of this unique opportunity, commercial tenants must be able to identify their options as well as be able to negotiate properly. Working with a commercial tenant rep will help you to figure out the best options that will ensure the smooth running of your business.