Thursday, August 13, 2020
By NEIL HARTNELL
Tribune Business Editor
A major property manager is urging commercial landlords to develop a “long-term plan” that tackles COVID-19 uncertainty by taking themselves and their tenants through to end-2020.
David Morley, Morley Real Estate’s president, told Tribune Business that while “nothing is cast stone” landlords needed to give their business tenants some idea of what to expect in terms of rent concessions and other incentives so that they, too, can plan their survival strategy.
“What we’ve been working on with our landlords is coming up with a longer-term plan,” said Mr Morley, whose firm manages around 40 commercial properties. “Originally, most of my landlords were operating on a month-to-month or two-month plan in terms of concessions.
“Now, what we’re discussing with some of our landlords, even prior to this lockdown is coming up with a plan that takes us through the remainder of 2020. We’re basically focusing on the local market because we’re not going to have much international visitors coming in. How do we get them through to Christmas, as Christmas has historically been the strongest part of the retail season.
“What we have suggested to landlords,” Mr Morley added, “is they extend through August what they offered in June and July for concessions, and then for September, October and November start reducing those concessions each month to a point in December where there’s maybe no concessions but, at the same time, be open-minded in case we have further shutdowns during that period.
“You’re trying to keep the plan as fluid as possible under the circumstances but, at the same time, giving tenants a longer term plan as it relates to concessions. You can say that nothing is cast in stone, but you have to keep working with tenants. You cannot afford to lose tenants.”
Commercial landlords provided many tenants with significant rental discounts during the first COVID-19 lockdown in a bid to retain them, with cuts of up to 50 percent the most common for businesses that were forced to close. Those that were allowed to remain open received smaller discounts.
“The overall objective is to retain and keep tenants,” Mr Morley reiterated. “I don’t think any landlord can afford to lose a tenant because any loss of rent will be greater than the concession given to keep them there.
“That’s something we have been stressing to our landlords all along. All the properties we manage, it’s a careful balancing act but the key objective is to keep the tenant in there.”
Mr Morley added that tenants needed to work with landlords as much as the latter worked with them, adding that they needed to be open and honest about their company’s financial performance and position and not exploit the situation to extract undue rental concessions.
“I would hate to have a landlord taken advantage of by a tenant,” he said.