In the past few weeks, how many times have you heard, “We are in uncharted waters with this COVID-19 virus”? Too many, I know!
This kind of response basically says we don’t know what to say, think, or do. It makes you want to throw your hands up and do nothing. Maybe we will wake up and it will be over.
Well, I’ve tried that, and it isn’t working out.
What we have right now is an extra-large helping of uncertainty. This uncertainty is running rampant throughout our economic psyche. It affects all markets — including the commercial real estate market. No one is immune to what is happening.
Businesses are scrambling to adjust their budgets in this new environment. Landlords are asking about relief from their banks regarding loan payments. Let’s examine this from the tenant’s point of view.
Tenants have already started to feel the pain. Some will see the effects of the coronavirus immediately. For others it will take weeks or even months to feel the full impact. If you are a medical provider, you are already feeling it. Non-essential visits are prohibited. No visits to the dentist, physical therapist, chiropractor, etc., means no income for your business.
Or maybe you’re a non-profit renting office space, and your most important fundraising event in April just got cancelled. Maybe you are a creative marketing firm who just lost your primary customer. There are so many examples of hardship — too many, unfortunately.
So what do you do?
Here is my recommended course of action:
1. Take a deep breath as an organization. There is no immediate solution. Let’s formulate a plan and move on it.
2. Review your lease documents. Now more than ever, it is crucial to know what rights these documents grant you.
3. Reforecast revenue for the next 30, 90, and 180 days. Be realistic, so you can share this with your landlord. This detail is crucial as it shows your landlord that you have an excellent handle on your business and you are asking for relief in a principled way.
Our commercial real estate team is ready to help you develop and implement your action plan. Lots of tenants will be asking for concessions from their landlords in the coming weeks and months. In fact, we have already started this process for our clients and have had excellent success in negotiating terms that will help your business survive this challenging time.
We look forward to hearing from you! Please feel free to reach out.