Continued COVID-19 Impact on Leases

05/15/20

Retail rents to fall 8-13% in 2020. This is the first step in landlords attempts to preserve as much wealth as possible in their investment.

As we know, the tenants have not been able to pay monthly rent, and we now enter the second month in which the recent lockdown has taken affect. Landlords should begin reaching out to tenants now and discuss how the rent is going to be paid going forward. The choice will be give temporary discounts, or not to receive any rent whatsoever.

With the Governor now extending the stay of all evictions through August 20, 2020, it is clear that most tenants will be emboldened not to pay any rent until September at the earliest. That will mean at least 5 months or rent unpaid.

Even when the stay is lifted, it will be several months before the Courts will be available to actually hear cases and to have the Sherriff evict a tenant. It therefore behooves the landlord to negotiating new deals immediately. There are ways to get a portion of the rent now, and in return, put themselves in the best possible position to protect themselves from future non-payments and anticipate potential evictions. 

Of course, the laws and rules may change over the next few months, but with the Federal Government already offering and issuing stimulus packages and the State have no additional resources, we doubt there will be any relief coming from these sources. Moreover, banks and municipalities will be seeking mortgage and real estate tax payments respectively from landlords, once all current forbearances or deferments expire.  Moreover, keep accurate records as I still believe there will be real estate tax relief in the form of a program due to the reducing rental and property values. This is just beginning, but we should be prepared. (More to discuss in tax certiorari blog).

Do not hesitate to reach out to us with any questions or assistance you may require.