Morris Manning & Martin, LLP

Leveraging Uncertainty to Craft Creative Leasing Strategies

04.19.2021

The pandemic has upended the commercial leasing world, but there's no shortage of innovative solutions from both landlords and tenants.

Commercial landlords and tenants are no strangers to changing economic cycles. Adjusting lease agreements to different circumstances is one of the main factors in negotiating favorable terms for both parties. But the pandemic has thrown a wrench into the status quo, prompting industry players to realign their strategies and think up creative solutions.

Flexibility is the new buzzword with both tenants and landlords looking to include the term into their lease agreements, according to Bonnie Hochman Rothell. Landlords need protection in case of further eviction moratoriums and tenants seek to avoid long-term commitments. Hochman Rothell also noted that one of the most important lease terms being negotiated today—which was never even contemplated before the pandemic—is who is responsible for health and safety issues at the property. Parties are increasingly negotiating responsibility on that front.

When it comes to establishing a framework for the renegotiation process, lease relationships are best when viewed as a partnership and from a long-term approach, according to Hochman Rothell, who emphasized that a trust and partnership-based cooperation may be the most useful for the business relationship.

“Concessions may be necessary on all parties’ parts and creative approaches will be most effective. For example, we have seen leases extended and rental escalation clauses in exchange for forgiveness of some amounts that may have been deferred,” she explained.

Click here to read the full story from the Commercial Property Executive