As the COVID-19 pandemic and civil unrest have swept through the United States, we have been presented with novel challenges and uncertainty in nearly all aspects of life, including commercial real estate. The world of commercial real estate, dominated as it is by highly-individualized leasing arrangements, has always presented real estate attorneys with unique leasing questions, but now we are seeing landlords and tenants seek legal advice and assistance with even more new and unanticipated leasing challenges and questions. While the real estate market continues to operate with many of its usual and somewhat predictable economic forces intact, it has become clear in recent months that the current global pandemic, and the possibility of such a threat to public health and economic activity in the future, along with the current civil unrest will persist among those forces that will have an impact on the real estate market and both new and existing leases. Rather than a brief detour from life as usual, the first half of 2020 is beginning to define a new normal, and we aim to shed light on this emerging paradigm shift in the commercial real estate industry through a series of blog posts focused on lease negotiations in these uncertain times.
This paradigm shift is, broadly, a reaction to the economic, social, and public health implications of the COVID-19 pandemic and civil unrest arising out of racial and other inequalities in our society. We have helped landlords and tenants in the United States adapt on an individual level by addressing various leasing concerns including loss of income and rents arising out of government-mandated closings and needed modifications to space and common areas to comply with government-mandated restrictions and to create a safe environment for employees and customers. Even as various states, locales, and individual businesses resume a semblance of normal operations, it is evident that these novel circumstances raised by the initial disruption are impacting the vast majority of existing landlords and tenants and are impacting current leases and will come to dictate future leasing arrangements.
In light of the current uncertainties and unprecedented changes in the industry, tenants and landlords are looking for ways to modify existing leases and prepare new leases that not only address impacts that the pandemic and civil unrest have had on their businesses to date, but that also address the uncertain future we are facing. In this series, we will look at lease negotiations to address a variety of questions and concerns that have been raised by both landlords and tenants. What options does a landlord have when a tenant fails to pay rent during periods of mandatory closing? How can leases be revised to address the loss of income during the global pandemic and periods of civil unrest? What should landlords and tenants be negotiating with respect to improvements to the premises and common areas in light of recommendations for social distancing? Does the force majeure clause in a lease provide any protection and, if not, should it be revised? We will explore these questions and more throughout this series. Our first post will address negotiations of lease revisions to address rent payments (including abatement or deferral of rent).