How Landlords and Tenants Can Collaborate on Successful Store Reopenings, Including Rent
As retailers begin to organize their store reopening strategies, they will need to work with real estate management to find a solution that works for all parties. With many companies unable to pay rent or looking at introducing new methods of selling, such as curbside pickup, a successful reopening could depend on a collaborative effort between landlord and tenant.
“Each retailer is handling things differently based on their business being essential versus non-essential, plus the varying state-mandated shelter-in-place orders,” said Ami Ziff, director of national retail for Time Equities. “We have seen a strong collaboration on many fronts within the enclosed malls we own.”
Time Equities Retail owns and operates more than 120 retail properties in the U.S., with an emphasis on shopping centers. As these properties begin to reopen, Ziff has observed that popular changes being implemented include more-frequent cleaning; temperature checks at entry points; reduced operating hours; and additional security staff to enforce social distancing guidelines.
The issue of rent is a more complicated matter. The stakes are high, and in some cases these disputes have led to landlords suing their tenants for lack of payment.
As a result, many real estate management companies — including Time Equities — are addressing it on a case-by-case basis. For instance, Ziff said, essential businesses that have continued to operate are less likely to receive rent forgiveness than those that were mandated to close by state orders.
“Landlords are doing the best they can to assist as many of these operators as possible, without going out of business,” he said. “We review each request for assistance individually and look to sales and financial statements to determine the need for aid.”
Ziff recommends that retailers get creative in how to leverage their storefronts if full-scale operations are not yet feasible. The explosion of “buy online, pickup in store” is one way that retailers can mobilize their stores as last-mile distribution centers and activate local inventory. Curbside pickup can cater to items that are traditionally hard to ship, due to size or weight.
“BOPIS saves the retailers shipping costs and will surely present an opportunity for such retailers to upsell their customers while in their store,” said Ziff.