The last installment in this series is directed toward a unique group – Tenants who have recently signed a lease but are still in the build-out phase or have just moved in.
Tenants Who Just Signed a Lease
I helped a client lease space several months ago. The space is currently being built out and is supposed to be completed next month, at which point the tenant is expected (contractually obligated) to move in and start paying rent. The challenge is two-fold; (1) the tenant’s contractor is impacted by a labor and materials shortage and has already notified the tenant that they may not be able to complete the work, and (2) the tenant has legitimate concerns about being able to complete start-up marketing and attract clients given the current economic climate and restrictions on meetings. My advice was to reach out to the new landlord and honestly share the challenges they face. The tenant has incurred most of the expenses (build-out) so far, so the landlord has no real direct expenses yet, rather than rent loss. I encouraged my client to ask for a delay in the commencement date tied to some mutually agreeable benchmark, such as the Governor rescinding the Executive Order banning meetings or a published financial index. It is also important for the tenant to have their real estate attorney re-read the lease to see if there is a force majeure clause or other language that protects them from delays outside of their control.
Crafting a sound real estate strategy is a team effort. I am not an attorney and cannot give legal advice, so some of the ideas suggested above should logically have the blessing of a real estate attorney before being implemented. If you don’t have your own attorney, I maintain a list of highly qualified attorneys specializing in real estate.
I think it is important to remember that we are all in this together. I have built my business on being open and honest, both with clients as well as parties I negotiate against. While some may see the ongoing challenges as an opportunity to take advantage of a situation and enrich themselves, I will always choose to seek solutions that benefit everyone (or at least that share the inevitable pain). The more we adopt that attitude the quicker we will get back on track. Any questions? I’m here, albeit virtually, and am always happy to provide a helping hand through counseling and guidance at no cost to you. If you have any feedback, suggestions or real world examples based on what I have written, I’d welcome your feedback. I’m never too old to learn new tricks!