LexisNexis recently released its June 2021 Commercial Leasing Report, reviewing the current U.S. commercial leasing market. The report is based on data from hundreds of recently negotiated, non-publicly filed commercial leases and contains expert opinion, including that of Becker’s David Blattner, regarding the ongoing impact of the COVID-19 pandemic.
“After the “shock” and economic stimulus programs were passed, everybody realized that it was in the best interest to cooperate,” said Becker Shareholder and veteran real estate attorney David Blattner. “We have negotiated acceptable abatement, deferrals, and extensions over the last year. In some cases, landlords have taken back space. Evictions have been rare.”
The report also outlines the top five heavily negotiated legal issues in commercial leases and explores rising lease modification trends.
“Space reductions converting to subleasing is what is happening and is what is going to happen,” said Blattner. “As landlords are unwilling to take back space, they will be more willing to approve subleases. Also, watch for reconfiguration of office space. The ratios for space per employee will actually go up as companies allow for more social distancing and eliminate or reduce “collaborative” work space. This may result in some companies to actually taking on more space if they don’t go to hybrid work weeks.”
This evolving ‘new normal’ begs the question: which party has the upper hand in terms of negotiating power?
“I don’t think there is any shift in the bargaining power one way or the other,” Blattner stated. “Office and retail rents remain depressed, so landlords are more willing to make deals. Does that mean tenants have more bargaining power? Maybe. But I think it only makes landlords more cooperative.”
To view a preview of the June 2021 Commercial Leasing Report, please click here. NOTE: The full report is available to all responders of the Survey of Commercial Lease Terms.
For over 25 years, David Blattner has focused his practice on complex real estate transactions with a particular emphasis on the acquisition, financing, and development of large-scale shopping centers, office buildings and executive parks, marinas, warehouse, flex projects, hotels, single-family and multi-family residential developments and condominiums. He represents a wide range of clients throughout Florida, the U.S., Canada, South America and Asia. To learn more about David, please click here.