How to Handle Tenant Requests for Rent Abatement or Rent Deferral In Light of COVID-19
While the real estate industry as a whole appears (at least so far) to not be affected to the same degree as the travel and entertainment industries, what impact can we expect?
Life is full of mistakes and learning experiences, and commercial real estate investments are not immune to these trials and errors. We all eventually learn from our mistakes.
Commercial tenants typically want the right to “go dark” in the event that their businesses are not generating enough revenue.
For many new business owners, one of the first steps in “starting a business” is acquiring the physical space where the business will be located.
In a typical commercial lease the tenant is required to continue paying rent, “without abatement, set-off or deduction,” throughout the lease term, except in circumstances of material damage or destruction. That continuous rental obligation usually extends to circumstances where the leased premises, and/or the project of which it forms a part, is closed by governmental shutdowns.
Property managers all across the country are scrambling to deal with the evolving coronavirus outbreak, and how to protect both owners and tenants from the effects. From establishing a policy for handling rent deferral requests to tackling service requests from tenants in a way that is safe for employees to implementing new technology to handle virtual tours for prospective tenants, property managers have a great deal on their hands, and a rapidly shifting situation to constantly adapt to.
Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). Coronavirus disease (COVID-19) is a new strain that was discovered in 2019 and has not been previously identified in humans.
Life is full of mistakes and learning experiences, and commercial real estate investments are not immune to these trials and errors. We all eventually learn from our mistakes. But if you can learn the lesson without having to make the mistake, then that is certainly preferable.
In today's economic climate, many retailers are finding it more difficult to continue operations. We see this in large shopping malls where numerous empty stores pop up as more and more stores go bankrupt or cease business for a variety of reasons. Those empty stores do not necessarily indicate that the property is not leased. The lessee may have simply ceased to operate, or, in industry terms, have "gone dark."
For many new business owners, one of the first steps in “starting a business” is acquiring the physical space where the business will be located. This can be a big step that involves a significant investment of time and money. Before you commit to a commercial space for your new business, it is important to understand the nature of commercial leasing and how it differs from typical residential leases. Failure to do so can greatly affect the ultimate success of your business.
Commercial rental property comes in a wide variety of forms, including office buildings, retail buildings, and industrial warehouses as well as medical and professional buildings. Regardless of their specific holdings, the owners of these properties need to find affordable management services that ease the burdens of ownership while preserving their ever-important bottom line. Without access to experienced, reliable management professionals, it’s all too easy to run into serious problems that decrease profitability and open the door to damaging legal liabilities.
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