A survey by lease accounting and management software company Visual Lease shows that even through the massive upheaval of the real estate industry due to the pandemic, tenants are (mostly) still paying their rent. But a growing number of companies that have relatively intact balance sheets are starting to ask for rent relief anyway.
The survey, which uses data from over 100 companies across a broad range of industry sectors, found that 30% of the respondents said between 75% and 100% of their leased properties were currently unoccupied. But 60% of that same group were still paying rent on all of those unoccupied properties for the month of April.
"In the wake of the COVID-19 outbreak when businesses of all sizes are pivoting to save cash, the ability to keep tabs on critical data points in your leases has become more important than ever," Marc Betesh, founder, chairman and CEO of Visual Lease said in prepared remarks. "As the financial impact of shelter-in-place mandates and forced office closures continues in the months ahead, landlords and tenants will need to maintain an open dialogue regarding expectations for rent payments and potential penalties for failure to pay."
The survey also found that 17% of respondents paid rent on some, but not all, of their leased properties, while 3% paid no rent at all on unoccupied facilities.
Some large commercial tenants, in the name of saving cash, have said they would withhold some rent payments or stop paying it altogether. Many landlords are reporting that national tenants, presumably able to pay rent, are still pressing for rent relief from their landlords.
Individual states have taken their own initiative to deal with the situation, given the lack of a coherent federal-level response. California, for example, proposed Senate Bill 939, which would ban landlords from seeking eviction proceedings while the Golden State is under a state of emergency.
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Patrick Smith
Patrick Smith, based in New York, covers the business of law, including the ways law firms compete for clients and talent, M&A and corporate work, leadership and marketing innovation. Reach him at [email protected] or on Twitter at @nycpatrickd
