As we eclipsed the year-mark since the pandemic began in early March of 2020, the commercial real estate landscape has been swept by eviction moratoriums and further legislation that just doesn’t coexist. Recently passed SB-91 serves as relief for landlords however it doesn’t cast a wide net since not all landlord may have qualifying tenants. Now, a year in, tenant-landlord relationships have played a distinct role in the ultimate success of a retail space.
When Gov. Gavin Newsom instated the ban on commercial evictions it added extra incentive for landlords to work with their tenants. The incentive is clear since filling a retail vacancy at this time is a difficult thing to accomplish. Certain landlords have been able to recognize that ensuring the slightest income for their commercial tenants to stay afloat is better than having them go under and losing that income stream entirely. For example, allowing your restaurant-tenant to utilize portions of a patio, parking lot, rooftop, or any open space, for outdoor dining.
A good portion of commercial landlords who have survived an entire year more than likely saw the crumbling effects of rapid tenant loss, at the beginning of the pandemic, and made the necessary adjustments.
Landlords become pressed when lenders hound them for payments. And a lot of these lenders have been after landlords with unpaid margins since before the pandemic started. That’s where the eviction moratorium has affected many landlords negatively. Some commercial tenants who are still open can’t be evicted despite already owing thousands in back rent.
“SB 91 would use federal funds to pay up to 80% of back rent accumulated between April 1 of last year and March 31, 2021. A landlord who accepts the money would have to forgive the remaining unpaid rent for that period.”
A landlord must be willing to forgive tenant debt but they don’t necessarily have to accept the relief. In the event that the landlord declines assistance, there really is no further recourse for the tenant. Which is why again, tenant-landlord relationship plays a factor a year after. The tenant can’t be evicted but it is likely that the landlord will try to recover what’s owed to them in small-claims court, a process the Trump organization wanted to start at the beginning of 2021.