Covid-19 has put most of the Commercial Landlords and their Tenants in a very difficult situation. These circumstances are unprecedented, and I don’t believe there is any clause in existing Leases that specifically takes care of forced store closures as a consequence of Pandemic. Hence, we have many Landlords and Tenants fighting over the rent payments and concessions/abatements. The biggest surprise has been many National Tenants, with very strong Balance Sheets and hundreds of locations, have (so far) refused to pay rents. The Landlords are getting ready to enforce their rights that may include extreme measures such as taking back stores and/or going after the other assets of the Tenant. Eventually the courts will decide who gets what, but I have a different perspective. I think the ‘Location’ will decide who gets what. If the location is very desirable, then the Tenant will succumb to the Landlord and if the location is weak then the Landlord will succumb to the Tenant. In case of these National and Multi-National Tenants it may be the combination of both. They will come to an agreement depending on the strength/desirability of the Location. The LL will demand full rent payments if he knows the replacement Tenant can be found quickly at better rents and he will negotiate and give concessions if the chances of getting replacement are rather bleak. So, it all comes back to the same old saying of Real Estate and it has been and will always be the winner i.e. ‘Location, Location, Location’.
Post a comment