Commercial real estate landlords and tenants are beginning to hash out solutions to problems caused by COVID-19 that include reducing the size of office spaces and renegotiating lease agreements, Better Homes and Gardens Real Estate MCR Bahamas Group Partner Tim Rodland told Guardian Business yesterday, adding that many businesses seem to be seriously considering the benefits of having employees work from home.
Rodland added that while there is some worry for newly developed commercial spaces, many of the spaces had been committed to before the onset of COVID-19.
He explained that while many of the conversations being had between landlords and tenants regarding commercial real estate are case by case, many of the considerations are similar.
Rodland said many tenants are considering reducing the square footage they currently occupy and possibly subleasing spaces in those offices.
“A lot of the bigger firms are thinking, ‘do we need all this square footage?’,” said Rodland.
“So if somebody was in a 10,000 square foot space, they are now considering how much do we really need?
“Of course, all businesses are thinking like that. You want to cut costs, there’s a lot of volatility in the market… and the first thing you look at is your real estate.”
COVID-19 forced many companies to have their staff work from home and Rodland said businesses have found the move has increased staff productivity.
While he contended businesses are likely to want to continue to have a brick and mortar presence, he explained that the commercial rental market is likely to see spaces downsized and the subleasing of office space, if allowed in renters’ contracts.
“Those conversations might come as landlords realize they do not want to lose a lease,” Rodland said.
He said COVID-19 has moved businesses to reconsider all parts of their business operations, especially real estate and forced compromise between landlords and tenants.
“People are starting to reach out to their landlords to find solutions to challenges,” said Rodland.
“A lot of people are thinking about this stuff, but they need to make sure their landlords are on board.
“A lot of people are in long-term leases too, so it’s not like they can just get out of their leases tomorrow. And in many cases they might not have an exit clause for this (COVID-19).”