Jonathan Kingsley

As the coronavirus crisis continues, more tenants are seeking rent relief from landlords. In South Florida, Colliers International's Jonathan Kingsley and Stephen Rutchik are part of a team that has pivoted to an advisory role, guiding office and industrial landlords and tenants as rent relief requests rise. They track requests from tenants in the portfolio that Colliers leases, which is about 4.5 million square feet. This involves about a dozen owners and 370 tenants in Miami and Dade County.

Kingsley tells that the first week the Colliers team began tracking, there were six requests for rent relief. That rose to 14 the second week and 27 the third week. Colliers has been sending out weekly updates to existing landlord clients, past landlord clients and landlord clients it hopes to work with in the future, he says.

"There have been a variety of tenants requesting relief for a variety of reasons," Kingsley says. "Landlords are not dealing with these requests without data behind them and we are very big on providing data to landlords to determine if these requests are valid. We look into the business practice."

The early relief requests have come from tenants including lawyers, medical and dentists' offices and firms associated with the hard-hit airline and cruise industries.

"We set up a protocol with most our clients on the landlord side, which is basically a pre-negotiation letter saying that nothing is binding until it's in final written agreement form," Kingsley says. "Tenants are required to provide financials as well as the business case for why they are asking for relief. If they have a specific request for how much they want and for how long a period of time, then we address that once they complete that application. They also have to first demonstrate that that have gone to the government to get that assistance lined up as well." Kingsley says most tenants don't think this crisis is going to last for months and months, and are generally asking for three months of abatement.

"The request is abate my rent or forgive my rent, for three months and then the landlord in exchange for that, if it's a short-term lease, meaning less than two years, it's generally valuable for them to add more lease term," he says. So if they give a tenant April, May and June for rent relief, the landlord with a tenant with a lease of two years or less is willing to extend their lease by some period to recapture those three months of abatement."

For long-term leases, landlords might offer April, May and June rent for free and starting in January 2021, they would pay that rent back proportionally over some negotiated term," Kingsley says.

Rutchik says everyone involved at this point is looking at the situation as potentially being a three-month duration.

"We aren't seeing tenants or landlords looking beyond that three-month window at this point," he says.


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