Some Miami commercial landlords to continue rent relief, despite county reopenings
Within days of the pandemic shutdown, tenants and landlords were negotiating rent abatements. Though governments have eased restrictions, retailers and restaurateurs expect the recovery to be a long, slow road. And that means rent relief discussions are still on the table.
“We have been talking with tenants for months. These tenants need help. We are trying to do what we can to help them survive,” said Scott Sherman, co-founder of the Brickell-based commercial real estate investment firm Tricera Capital.
While some landlords have refused to cut tenants a break, others have taken a long view. As conditions change, so do the terms.
Those that received support from the federal Paycheck Protection Program will be expected to pay rent, even if it’s at a reduced rate, come June, said Michael Comras, one of the area’s largest commercial landlords. Most owners handle rent relief requests on a case-by-case basis, but the most common strategy, he said, is to defer rent and spread what is owed over the lease term.
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Comras, the chief executive officer and president of the Miami Beach-based commercial real estate agency the Comras Company, said it’s better to work with tenants than simply evict them. “It takes too long to find a replacement.”
Out of the Box Ventures, a Design District-based branch of Lionheart Capital, waived rent for all of its tenants across 17 states, including Mrs. Mandolin, Kobayashi Floral Art Studio, Earthy Chic and Felix in Buena Vista, wrote company founder and chief executive Ophir Sternberg by email.
“Landlords and tenants right now are all in the same boat. There’s obviously a lot of pain going around in this crisis,” Sternberg wrote.
The firm can afford to forgo rent because of its mortgage agreements, Sternberg said. “We are fortunate to have very low leverage, and that allows us the flexibility to make this type of offering. It’s definitely affecting our bottom line; we’re coming out of pocket pretty significantly to keep this going. But we can afford to do it and we feel it’s the right thing to do.”
One of Sternberg’s tenants, Kenneth Stubbs, owner of Kobayashi Floral Art Studio, saw an 80% drop in business in late March and early April. Most of his shop’s business comes from walk-ins, he said, and special events, including bat and bar mitzvahs, anniversaries, and weddings. The bright side: Homeowners desperate for a pick-me-up brought a 20% uptick in recent weeks.
“The rent abatement has made the difference in whether or not I can keep my business. Our money is now going towards living, buying necessities, food and paying for electricity,” Stubbs said.
Some restaurants and retailers may have a location advantage when it comes to attracting shoppers and, as a result, they may meet more of their rent, Comras said. For the malls that have reopened, those that are outdoor will likely see more customers, he said.
“Places like Lincoln Road will benefit from this type of environment,” Comras said.
Restaurants at outdoor malls will have the opportunity to place most, if not all, of their seating outdoors, he said.
Retailers are expected to provide curbside pickup, Sherman said. Some shoppers, he said, will opt to order to satisfy an immediate need, “since some customers will want an item in an hour or two.”
The continued rent relief will add pressure on rental rates across Miami, Comras said. The upside, he said, is that tenants once priced out of certain areas and malls, including Lincoln Road, may finally be able to move in and afford rent.
This story was originally published May 20, 2020 at 7:00 AM.
