Advice for retail landlords and tenants

Apr 16, 2020
Written by wpengine

Stay-at-home orders and scarce shoppers find mall landlords and their tenants in a real financial bind. Where will rent money come from and how can the landlord survive without lease payments?

The International Council of Shopping Centers posted an interview with four real estate executives who offered advice on how landlords and tenants can work through the challenge in hopes of surviving the COVID-19 virus pandemic.

Some of the key advice includes:

  • Local tenants typically don’t have the same resources as national credit tenants to weather this, so landlords may have to strategically respond to local tenants on a case-by-case basis.
  • Retailers need to stay engaged with their customer base by providing a high level of service over the phone or internet and by using social media to keep their brand name out front as much as possible.
  • Tenants will be expected to demonstrate need rather than trying to obtain concessions larger than they need.
  • Tenants also need to understand that the landlord has a mortgage to pay and should offer something in return for some rent forgiveness or forbearance, such as paying back a three-month rent holiday over a three, six or nine-month period.
  • One executive suggested federal government intervention to invoke a 30-,60- or 90-day rent or debt obligation holiday for all parties.

Short of governmental intervention, lenders, insurance companies, landlords and tenants will all have to compromise to reduce disruption or worse as much as possible.

The executives seemed to agree that some undefined retail reset will result from the pandemic, depending on how long it lasts. The big unknown is how big of a reset it will be.