It’s not a controversial observation to note that the COVID-19 pandemic (and the related quarantine limitations and shutdowns) has presented an unprecedented series of operational and financial challenges for the commercial real estate sector. Landlords and tenants alike have struggled to adapt to new restrictions and limitations, mandatory closures and public health guidelines, and rapidly evolving consumer preferences and priorities.
The good news is that unprecedented challenges lead to equally unrivaled creativity and innovative adaptation. One area where that innovation has been especially noteworthy is in the steps that landlords are taking to find new ways to support their tenants.
The pandemic has prompted some landlords to think and act differently about how to show value and remain a malleable real estate partner during these uncertain times. From flexible lease agreements and office re-configuration services, to assisting with marketing and other communications, forward-thinking landlords are taking steps that have the potential to redefine the landlord-tenant relationship for a long time to come.
Flexible leasing and adaptive expertise
While some landlords have responded to the financial pressures their tenants are under by being flexible about offering shorter and more forgiving lease terms, others are finding creative ways to add structural value for new and existing tenants. Some leading owners and operators are offering inspired office design and reconfiguration services, complete with a consultation from experts on safety and public health optimization.
Some are taking it a step further and connecting tenants with experts who can help them understand their needs going forward, and facilitate the kind of strategic planning that will allow them to make thoughtful and informed decisions about the size and type of spaces they are likely to need going forward. Other landlords are streamlining transition logistics, allowing tenants to store equipment, furniture and property on site, but not charging them rent until a new space has been built out and occupied. For tenants transitioning from full or partial telework, that grace period of a few months can be a financial difference-maker.
Marketing and communications
Some landlords are also being creative when it comes to helping tenants get their message out in new and different ways—and to new and different audiences. Some are using digital screens in their center to relay messages and promote tenants. Others are helping tenants showcase their products and services by taking their existing printed materials and distributing them through e-blasts to larger audiences.
Some leading innovators are going beyond their tenant roster and reaching out to businesses and institutions in the community to provide similar services and cross-promotional opportunities—as well as to leverage holidays and other special events programming. Perhaps most intriguing of all is some of the inspired work being done with podcasting and other new media. Farbman Group, for example, has built an on-site podcasting studio in collaboration with a podcast production partner. As such, the firm is giving away airtime as an incentive to new and existing tenants.
A barter economy
Another strategy some landlords are pursuing to provide additional flexibility to tenants is allowing tenants to pay some or all of their rent in trade, with services instead of cash. Typically, a trade association is established to facilitate those exchanges, with agreed-upon currency equivalents for things like building services, maintenance and other value-added services.
A flexible future
It’s clear that the global pandemic has changed things. Despite the stresses and consequential financial losses, pressure leads to inspired innovation. The successes we’ve seen in the ways real estate firms and landlords have evolved their thinking in this time of turmoil and trauma give real reason for optimism in the future.
Visionary landlords and their tenant partners have met these historic challenges with inspired new solutions and collaborative programs and partnerships. That is a sign that the commercial real estate landscape is in good shape—not just to survive the difficulties of COVID-19, but to thrive with newly discovered flexibility in a brighter post-pandemic future.
Andy Gutman serves as the president of Southfield, Michigan-based Farbman Group, a leading full-service real estate firm with Midwest expertise and a global reach. The firm handles all facets of real estate transactions, from property management and leasing to acquisition and disposition. For more information, visit www.farbman.com.