Morris Manning & Martin, LLP

Rent Payments Loom for Restaurants as Capacity Restrictions Lift


Many restaurants in D.C. and across the country have been paying little to no rent over the last 14 months as the pandemic has depressed their sales. 

Now, with the warm weather and vaccinations bringing more customers, and with cities like the District lifting their capacity restrictions, restaurants will soon have larger bills to pay. But the difficulty of hiring back staff and the uncertainty of whether people are comfortable enough to crowd into restaurants, could make it difficult for restaurants to pay the rents their landlords will soon demand. 

The D.C. government last week said it will lift all capacity restrictions on restaurants this Friday, while some bars, clubs and entertainment venues will be allowed to return to full capacity on June 11. Maryland lifted all business restrictions Saturday. 

In some cases, this lifting of restrictions is triggering automatic clauses in temporary agreements made last year that will force tenants to pay higher rents than they have paid during the coronavirus pandemic. In other cases, the improving situation for restaurants is leading landlords and tenants to negotiate higher rents.

For some restaurants that failed to reach agreements with their landlords last year, they owe tens of thousands of dollars in unpaid bills, and they could be forced out when D.C. lifts its commercial eviction moratorium, part of the state of emergency that isn't tied to capacity restrictions. 

"Stimulus checks and additional grant money is to clear obligations up and down that ladder, so landlords get paid their rent, so they can in turn pay mortgages and potentially utilities or other things that need to be paid, and that the bleeding stops a little bit," Bonnie Hochman Rothell told Bisnow. 

She said most landlords are willing to work with their tenants and aren't expecting a check for the full amount of back rent owed as soon as restaurants receive stimulus or return to full capacity. But she said landlords do see the stimulus checks as a way for them to start receiving the money they are owed, and they are looking into ways to receive that money. 

Read the full article here. Bisnow registration required.