Strategies for Negotiating Commercial Landlord Rent Relief
First, it is important to keep in mind a win-win collaborative negotiation and at almost all costs to avoid litigation and the court system.
Tenant asks for three months’ rent relief; Landlord compromises and accepts 50% rent for three months with no repayment.
Tenant asks for three months’ rent relief; Landlord accepts 50% rent for these three months and amortizes with no interest the deferred rent over the remaining term.
In any of the above three cases if the tenant requests and is granted government assistance to cover their payroll and rent, then the amount of assistance relating to rent shall be repaid to the landlord and the amortization reduced or eliminated.
Using a one-month per year factor, add one year of lease term, as-is (no TI’s) for every one month of rent forgiveness up to three months total.
Some companies are now considering adding additional office space to increase the physical separation of Employees and this might be a negotiating point to offer expansion if there is adjacent available space in exchange for 3-6 months of half or full rent abatement.
If a tenant has a renewal or expansion option that might be worth less to them and with more to the landlord in exchange for three months’ rent abatement, or other tenant rights i.e. building signage, reserved parking or other tenant benefits these might be traded for rent abatement or deferral.
Make sure everything you do is in writing!
I would love to hear your creative solutions to this issue. Please email me at jeff.weil@colliers.com
Thank you!
