Commercial real estate owners, brokers, and landlords have collectively made many hundreds of billions of dollars a year in recent years as the economy zipped along.
Now, they’re getting clobbered by the pandemic-fueled economic crisis. Worse, their industry may be forever changed by it.
To state the obvious, extracting rent from nearly anyone right now is problematic. According to the National Multifamily Housing Council, just 69% of U.S. households had paid their rent by April 5 compared with the 81% who’d paid by March 5 and the 82% who paid by the same time last year.
That statistic will almost assuredly look worse by May 5, given the soaring numbers of both laid-off and furloughed employees.
On the commercial side, the problem is beginning to look as dire. In addition to the countless small retail and restaurant businesses that may be forced to permanently vacate their commercial spaces because they can no long afford them, a growing number of corporate chains is also beginning to prove unwilling or able to pay their rent.
Staples, Subway and Mattress Firm have also stopped paying rent as a way to strong-arm building owners into rent reductions, lease amendments and other courses of action designed to offset the losses they are incurring because of the coronavirus.