The COVID-19 pandemic has caused many businesses to struggle. One way to alleviate the financial stress is by approaching landlords to renegotiate commercial lease. Businesses can take several approaches to work out new terms with their landlords. To ensure that your company is in the best position during COVID-19, it is important to put these points in mind:
1. Operational Policies
Depending on who is responsible for building, cleaning and maintenance, there will be additional precautions for ensuring safety against the spread of COVID-19. For example, there will be no-touch antibacterial hand soap dispensers, hand sanitizer dispensers, increased maintenance, and guidelines for the janitorial staff. In some cases, these changes may not be communicated with you if it is not required in your lease type. Therefore, you must learn more about your landlord’s policies as regards COVID-19, so you can act appropriately.
2. Space Needs for Social Distancing
As cases of COVID-19 rise across the country, it is essential to evaluate how much space you might need to accommodate social distancing for both customers and employees. This may likely cause a change in the office structure. For example, you may need to install physical barriers between workstations. Also, you may need to check if you have enough space in your current space to accommodate social distancing. Perhaps, you may need to look for a new space.
3. Flexibility of Lease Length
Regardless of what you are trying to do with your existing lease, you must be well acquainted with the terms in the lease document. This is to prevent you from breaking contract clauses and missing out on vital dates. Once you understand the details of your existing agreement, you may want to negotiate for a more flexible lease or ask for a shorter lease time frame.
4. Income Sharing
To cushion the economic effect of COVID-19, you may want to ask for an income-sharing agreement. This is especially good if revenue has stalled in recent times, but there are indications that things will go back to normal due to transaction records from the pre-pandemic period.
One major thing that all corporate tenants need to check during these COVID-19 times is their insurance policy. Corporate tenants should check for general liability, business interruption, crisis management, and/or mitigation cover. They need to see what policies might apply to the current COVID-19 situation. Alternatively, you can contact your insurance broker and discuss your current position with them.
6. Open Communication with the Landlord
In light of the pandemic, corporate tenants should have an open communication line with their landlords. Corporate tenants should be able to ask questions as regards insured risks, safety protocols, and any new guidelines. When communication is transparent and open, everyone involved will feel protected and best commercial lease practices will be fostered.
7. New COVID-19 Clauses
COVID-19 will cause new clauses to be inserted in lease agreements. For example, global pandemics may now be requested to be incorporated in “insured risks.” Negotiating commercial lease agreements can be complex, and you should work with a tenant rep. By reviewing the lease with your tenant rep, you can mitigate risk and ask the right questions.
COVID-19 has disrupted a lot of things. Whether you’re planning to renew or you are a potential new tenant, it is essential to review the above to avoid confusion and mitigate expenses.