2021 IN REVIEW: Covid-19 and the Evolving Commercial Leasing Market
Blank Rome real estate partners Beth Bernstein Connors and Samuel M. Walker, who also serves as co-chair of the firm’s Real Estate practice, provided commentary and insight for the 2021 IN REVIEW: Covid-19 and the Evolving Commercial Leasing Market (LexisNexis, Private Market Data: Commercial Leasing Report; 2022), which draws on recent interviews with seasoned commercial leasing attorneys and data from Practical Guidance’s Private Market Data: Commercial Leasing data bank to provide a look back at the 2021 commercial leasing market, assess the continuing impact of COVID-19, and highlight other hot topics in commercial leasing.
In the report, Beth and Sam comment on some landlords who have shifted their focus from accommodating tenants in the short-term to protecting their interests against future disruptions, stating:
“We certainly saw landlords and tenants working together throughout 2020 and early 2021 to deal with disruptions and uncertainties caused by COVID-19 and its variants. But as we move into 2022, we see landlords becoming less amenable to building rent abatements or deferrals into new leases, even in instances where government mandates force them to close for business, as landlords start to treat this as a typical exercise in risk allocation, with the burden shifted onto the tenant since this is a now foreseeable hazard of doing business.... Landlords are adding pandemic/epidemic language into force majeure provisions to allow for delays in performance caused by such occurrences, but such provisions expressly carve out rent and other payment obligations so would not excuse rent payments. We are seeing this nationwide.
"[However,] in certain sectors (such as food and beverage and fitness, which continue to be materially adversely impacted by the pandemic), some abatements and deferrals are still being provided. And at this point, many landlords will still agree to give an extension of an initial free rent period (or deferral arrangements) in the event permitting offices close or a government order shuts down construction as a result of COVID-19 or a variant, delaying a tenant’s initial build out.”
To read the full report and additional commentary from Beth and Sam, please click here.
Reprinted with permission from LexisNexis.