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Permalink Reply by Brian Lipscomb on June 2, 2009 at 3:30pm

Mike,

The Daily Grind has "successfully" negotiated lease expense reductions over the past six months. The quote marks refer to the fact that the reductions have been on a temporary deferral of rents (meaning we have to pay later) as a first step in the negotiations. The second step being the elimination of the deferral and permanent reduction for the remainder of the lease term.

I would expect that the level of negotiation would be based on the need of the landlord to keep the space occupied, and the size of the property owners portfolio. The larger portfolio owners don't seem as interested in negotiating!

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Permalink Reply by Mike McGinness on June 2, 2009 at 6:48pm

I finally approached my landord about some possible lease/rent relief end of January. While he said he didn't have much wiggle room agreed to a 20% temporary reduction until the economy turns around, not a deferral. This month is month 5, he hasn't approached me and I'm not calling him asking how long it'll stay reduced! And in truth while business has been much better than end of last year early this year, it's still not quite back to '08 levels. Almost, but not quite. And a number or rather down months to make up of course.

It never hurts to ask! The worst is they'll say no. And you might be pleasantly surprised as was my case.

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Permalink Reply by Stephen Curtis on June 2, 2009 at 6:57pm

I have talked to my landlord about negotiating a lesser rate, and he is receptive. Just a matter of working out the details now.

I think that knowing the vacancies and, as Brian stated, about how large a portfolio you are up against, are helpful. My landlord has a couple of long term vacancies, and does not have extensive holdings - as far as I know.

Can't hurt to ask! They would most likely rather have some income from that space, rather than the hassle/cost of trying to re-lease.

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Permalink Reply by Marshall Fuss on June 3, 2009 at 6:00pm

In the current economy many landlords are granting rent reductions, sometimes temporary, sometimes permanent. Chances of getting a reduction are mostly based on local real estate conditions, how concerned the landlord is that you may end up vacating, and, in multi-tenant properties, how many other vacancies they have to deal with in your building.

Do not be surprised if the landlord asks to see your financial statements to confirm your situation. Corporate/LLC tenants without personal guarantees cause the highest fear factor for landlords (and are more likely to win rent cuts), because the landlord knows the tenant will have less incentive to tough it out through the bad economy.

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Permalink Reply by Jason Dominy on June 3, 2009 at 6:13pm

I say Screw em. Okay, just kidding. No, I'm not.

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Permalink Reply by Jason Shipley on June 4, 2009 at 5:04am

Ours has flat out refused to respond to your attempts to initiate negotiations. He just ignores us. We are fortunate since we roast and do some consulting and training things have balanced out for us but our retail location is under expectations, the area just has not matured as we thought it would. The center we are in still has vacancies one the one across the street has never had a tenant.

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