There’s nothing like a crisis that’s out of our control to understand the contract term, “force majeure” or the well-known phrase, “desperate times call for desperate measures”. That is where much of real estate and its owners and users are finding themselves during the unprecedented COVID pandemic.
It is easy for all parties to go on the defensive and yet, at this time of coming together, an understanding of all parties’ positions and fairness should rule. Tenants need some relief and yet landlords need to pay the mortgage, the taxes, the utility bills. The crisis impacts real estate like a game of dominoes. Each ask by a tenant requires a corresponding ask by a landlord to a lender, to a vendor, to a municipality.
Below is a list of conversation starters to assist with sorting through a complex situation. We expect that you would work closely with your real estate consultant or broker as well as your legal counsel with a careful review of your lease document before discussions. See this helpful link.
Rent reduction
Rent deferral
Rent abatement
Use of security deposits
Loan conversion/payment plans
Lease commencement delay
Minimizing utility and other operating costs
Subletting and short-term temporary leases
Explore relief programs
Space changes moving forward
And not to be forgotten is the return to work. It is important to make sure everyone is doing their part and is accountable for what they need to be doing. Planning checklists for owners, their property managers and business leaders in advance of re-entering the workplace during the pandemic are below:
Landlords and property managers
Preparation of the building: safety, cleaning, compliance, policy. A complete guide for properties along with a communication plan needs to be developed and delivered to tenants and other stakeholders and anyone that will access the building. This plan should outline procedures for and safety protocols involving:
Entries and doors
Elevators, escalators, and stairs
Restrooms
Common areas: lobbies, mother’s rooms, drinking fountains, valet/vehicle, mailrooms, etc.
Food courts, cafeterias, coffee stations
Parking areas
HVAC system
Fire/life/safety systems
Lobby health kiosks – temperature taking
Installation of low touch/no touch
Protocol and policies for cleaners, security, vendors, contractors
Fire drill and emergency policies
Employers
The same holds true for employers and communicating to employees. Consider the following:
Employee readiness surveys
Communication plans
Transportation to work risk assessment
Landlord and property readiness
Tracking and tracing – within the space, illness outbreaks
Work from home policies
Physical space planning and coordination – seating assignments and use policies
Operating rules and procedures during the pandemic – food/beverage, meeting size, use of common area, employee desk policies
Cleaning protocols
Installation of low touch/no touch
PPE requirements
Health and wellness support
Employee experience considerations
Employee health status and checks
HR and legal considerations including HPPA
Stimulus programs
Insurance policies and claims
Deliveries and vendor commitments
Visitor policy
Vendor policy
Travel policy
We hope this crisis is short lived in the context of history and we hope that we can learn from this situation how to be better prepared for the likely next crisis. We hope relationships between parties will be strengthened as everyone works together to weather this storm. As it has been said, “we’re in this together”. May we all be better as a result of this challenge and may our efforts create an even better world for the future workforce.