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]