Commercial Tenant’s Guide for COVID-19 Rent Relief Options

Commercial Tenant’s Guide for COVID-19 Rent Relief Options


The entire world is suffering due to the pandemic. As medical health experts reported that this disease could spread from person to person, most of the countries announced a complete lock down to prevent trouble. The business sector is undergoing huge losses due to COVID-19 as employees are following protocol and staying at home.

The government is offering relief options. However, the imbalance in the economy is quite critical to managing at different levels. In this scenario, landlords and tenants are also affected by the pandemic. As people are not able to work actively, the sources of income have also reduced. If you are also in trouble due to fiscal health issues, this commercial Tenant Representation guide may help you.

Here we have listed few rent relief options that you can opt for during COVID-19 crisis:

  • Blend and Extend:

This strategy is most preferred as it allows tenants to follow lower rent schedules with some extension to the lease term. For example tenants can discuss with the landlord that they want to extend the lease for ten more years with a blend of the old and new rates. This option creates a win-win situation for both landlord and tenant. For a landlord, it will help to reduce the immediate costs, whereas landlords need not spend time and money on restructuring the new lease term with the new tenant.

  • Rent Deferral:

Rent deferral is the process of restricting of rent schedule for the active lease term. It is applicable to the remaining portion of the lease term and provides immediate relief to the tenant. On the other side, the landlord can maintain cash flow while giving enough recovery time to the tenants. When this type of rent relief occurs, the landlord can choose many different options to structure the deferral payback. They can add some additional months to the lease term or increase the amount when the crisis is over.

  • Short Term Leasing Workouts:

The chances are that many tenants are still able to work online or are maintaining work with partial operating hours, but chances are that they are suffering from reduced cash flows. In such cases, landlords may have clear discussions with the tenants to understand the situation before taking any action. If they are violating any rule intentionally, then landlords may simply declare them default and reserve remedies or rights. Landlords may offer some lease concessions to these tenants for a few days, or they may choose to start lease enforcement actions immediately. The decision depends on various issues and circumstances.

Tenants may address the key issues by following short-term leasing workout agreements. There are plenty of options such as rent repayment, rent relief, modification in the current operating clause, or third-party consents.

Commercial landlords and tenants need to go through all possible procedures and follow the appropriate option during these unprecedented times. Chances are tenants will improve the cash flow when the uncertainties due to pandemic come to an end. Therefore, it is better to look for the most convenient solutions for the time being.

About Denise Sherman, Tenant Consultant

Denise Sherman served in the Army as a Logistics Officer and now serves her community as a REALTOR® with Carrow Real Estate Services.  She combines her love for the industry with her passion for helping businesses grow.  Her team enjoys the role of Commercial Space Consultants as Tenant Representatives because they get the opportunity to assist new and experienced business owners locate a home for their business and make good real estate decisions. Her team understands one strategy doesn’t fit all and each business has unique objectives, scenarios and requirement which should be reviewed for a customized strategy.   We pray you and your family are safe and health and look forward to helping you through this “storm”.

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