The monthly rent obligation is one of the largest recurring expenses that most business owners incur and the lifeblood of the landlord’s existence. The functional aspects of the landlord-tenant relationships and lease agreements should be an immediate focus given business uncertainty due to the Coronavirus, and the unwinding of the economic bailout/stimulus package over the next 30, 60 and 90 days.
Now is the time to equip yourself with the knowledge on the terms, conditions, and provisions of your lease; and to prepare yourself to communicate clearly and strongly to your landlord You can negotiate the best possible agreement or changes to your agreement:
- Timing is everything and it is prudent to open lines of communication with your landlord now.
- Determine what your needs are and know what you are asking for… Options include,; A) Relief in rent, B) Rent abatement, and/or C) Lease extension consideration.
- Know your lease and its provisions so that you can navigate through negotiations with your landlord from an informed position.
- Investigate other/outside avenues of rent relief. Your landlord will want to know that you are looking in other directions and not just them to solve a cash crunch problem and they will ask where you are looking for relief. Anyone looking for help from the bailout/stimulus package should be ready to speak on the steps taken and what you believe is or may be available to tenants.
- The first opportunity to do something is the best opportunity to do something. Be definitive, be specific, stand behind your request, and explain why the landlord’s help is of importance.
- Give a realistic timeline for a response; recommit to the landlord as part of the tradeoff for assistance.
As a tenant explain what you may be facing and asking for:
- Business strategy uncertainty – length/duration.
- Short term rental relief need.
- Your clients are affected by social distancing.
- Revenue push back – the rippling of the same through the economy (free enterprise will survive and flourish, this is a short-term request).
- Layoffs/downsizing will be reversed, again the need is short term.
- Access to capital is changing.
- Changes to square footage needs could be a good common ground.
You can always go back for additional assistance once the bailout/stimulus package is understood.
Be understanding of similar problems the landlords are facing:
- Tenants downsizing.
- Commercial Real Estate values are decreasing.
- Limited buyers for assets.
- Access to capital.
- Downward pressure on rent.
- Rising vacancies.
- Tenants seeking rental relief.
- Weaker balance sheets.
Make sure to be calling your landlords now!
Landlords are putting together committees to develop programs and rules for how this is all going to happen. Understand what you are asking for, and how you are asking; landlords won’t forgive rent without thinking about how you and they are going to get through today’s times – you need to be prepared and have the answers.
(Note: One thing you want to investigate before speaking with your landlord is to see if your insurance policy has provisions for business interruption. This will in most cases include rent payment provisions).
With the 1st of the month is right around the corner, a request in writing before the start of the next rental month will get the negotiations beginning and possibly freeze the April rent payment.
Remember to stress your belief in free enterprise, small business, what you do for a profession, and its need by entrepreneurs.
The landlord wants to hear your belief in the long-term viability of your business, and therefore you are asking for assistance rather than a lifeline.
If we can be of any assistance regarding your lease, please contact us before speaking with your landlord.