What CRE Owners Need To Consider When It’s Time To Report To The Office
By: Date: November 5, 2021 Categories: forbesrealestatecouncilblog,lifestyle,Real Estate,Uncategorized Tags: , ,

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Staff meeting in office with social distancing


As more of the United States population receives the coronavirus vaccination, property owners and commercial tenants are wondering whether it’s time to throw the office doors open. Despite some organizations like Twitter announcing its employees can work from home forever, many companies plan to call employees back to work in order to justify their existing leases. Before we can proceed as we were pre-disruption, property owners will need to consider the following questions: 1) Will we need to shut down again? 2) How do we protect our tenants’ ability to work and provide safe customer spaces? 3) Can we do 1 and 2? 

The various issues we are facing are far from being resolved from a public health perspective. The waves of new and unknown variants could disrupt any employee return and associated business reopening in a normative fashion. 

Some of the property owners I have spoken with during this time have many questions, mostly laments, like how long do you think this is going last? Who should I take on as a tenant now, if I can even get one? Will they pay? If the landlord is taking on a new tenant and there are improvements to be completed at a considerable cost, is now the time? What if we shut down again?

Of course, I don’t have the complete lay of the land; no one does. But my advice has been to, where it makes sense and can be maintained, install visible safety features like touchless entry and exit systems that way you can cut down on the constant cleaning of high traffic areas. This is also a good time to install and engage tenants through notices and prominent signage with health advisory messages and building updates.

There are proposals and pseudo plays out there that give the look of an established protocol where none currently exist in the form of health and safety ratings. This is a reasonable idea, but a self-appointed non-government entity suggesting it knows what is and isn’t a safe building is questionable at best, particularly when the property owner is charged for a certification sticker based on the square footage of the building, to the tune of tens of thousands of dollars per year. By chance the public should start to consider such schemes as valid, this could prejudice the non-participating property owners. The point is that in order to have a real business restart, we need the liability issues associated with pandemic-related issues moved from the back of the businesses whether via issuance of insurance provided by the government or another government-authorized method. 

Regarding taking on new tenants or even rewriting agreements with existing ones, it’s important to check the condition of the tenant’s financials and for a period that reflects the pandemic results. This time has been tough for everybody, but real estate transactions still require due diligence. As a landlord, you make commitments to the tenant, so it’s fair to make sure you’re confident that they can keep theirs.

My advice is to craft your lease document to provide a map as to what will happen between the parties in the event of a recurrence of mass sickness or other lease interruption issues. Particular areas of interest would be government-mandated disclosures and procedures along with what happens with rent payments in the event of another outbreak or stoppage. Have your attorney review the document to ensure that the most current language is provided if needed.

Some property owners seem to believe that once everyone has been vaccinated, issues and legal considerations related to leased property will be relieved, but I don’t think that is necessarily the case. Your building’s staff should remain up to date on protocols relating to public health and safety and returning to work. I encourage frequently checking the CDC’s website for the latest information. Furthermore, as vaccine certificates continue to be discussed, it will be important for property owners and operators to develop a procedure that tenants can follow as a guide with input from professionals who have expertise in this area. 

I wish us all luck in attempting to get back to what we can be: Great.

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