Across the country, businesses are coming to grips with economic pain on par with the Great Depression and social distancing requirements stretching for months, if not years.
For office landlords and their tenants, this new world order is particularly uncertain as extreme lockdowns roll into a second month in major markets like New York. Both sides are keen to protect their financial interests, and delicate, tense conversations about rent payments are taking place.
Though landlords are generally quick to tout how they view their occupiers as partners, many are now saying that if tenants want or are expecting some form of relief, they had better be prepared to prove they need it.
“We are asking ourselves the following question: ‘Is this an existential crisis or is this someone blowing smoke?’” said one New York City office building owner, requesting anonymity as negotiations are ongoing.
Office owners are expecting their tenants to hand over financial statements, previous leases, revenue history and where they see the business going in order to negotiate on the rent.
“When a company comes to us for this kind of help, it has to be willing to open its kimono,” the landlord said.
There is already friction between renters and landlords across the spectrum. Coworking and flexible office providers like WeWork and Knotel have reportedly stopped paying rent at some locations. Knotel CEO Amol Sarva said his firm is already in talks to hand back 20% of its portfolio to landlords, and a third of its tenants have asked for rent relief.
Some of the country’s biggest retailers are sparring with their landlords over unpaid rent as consumer spending retracted by record levels last month.