Many landlords and small-business tenants are working in good faith to ensure each other’s survival. The pandemic offers many examples of mutually beneficial arrangements, which runs counter to the prevailing anti-landlord sentiment in the media.
- Percentage of sales deals have been common: These retail lease arrangements typically reduce the rent by 25% to 100%, and in exchange, the tenant pays the landlord a cut of its sales, often 5% to 20%. New technology has been helpful in providing a full accounting of a tenant’s receipts, according to the Wall Street Journal.
- Mutual survival: Sometimes lawyers have to get involved in thorny lease negotiations, but in the majority of cases the parties strike an agreement allowing mutual survival.
- Deal structures where everyone shares the pain: Many deals also include a renewable rent reduction for a specific duration — typically four to six months — or one tied to a government action, such as reopening indoor dining at full capacity.
- Tenants have options: Rosa Mexicano, a Mexican restaurant from chef Josefina Howard, closed its flagship location at Janet Vitale’s 1063 First Avenue after failing to reach a deal with the property owner. The 37-year-old eatery then signed a new lease nearby for a 5,000-square-foot space at MWest Holdings’ 985 Second Avenue, CO reported. [WSJ+CO]