Expert: Stephen A. Cross, CCIM - 4/30/2009

Question
Hello,
My question is very similar to the one answered by Jim regarding the lowering
of rent.  My in-laws, Korean immigrants, rent a space to run their small
liquor store/conv. store.  The plaza that they are in has not seen the loss of
any anchor stores but business has really slowed.  They have asked me to
send a letter on their behalf to their landlord- I am wondering if you could
give me an outline on what to right and suggest how much lower I ask for the
rent to go.  The current rent is 4700, they have rented since 2003 or 2004.  
They have one year to go on this lease.

Answer
Myoung:

Even the best-managed businesses are being affected by this recession.  In order to survive, and make a reasonable profit, they need to find ways to reduce their overhead.  For many, real estate is a good place to start.

The landlord will reasonably be interested in seeing the financial records of the business, which will likely show a significant decline in revenues. I suggest having these records available for the landlord's review when requesting a specific reduction in rent (and perhaps NNN expenses)for a specific period of time.

Be careful not to agree on a 'deferral' of rents (which will need to be repaid). You are looking for relief in the form of an absolute forgiveness of rents.  

With a year remaining on the lease, this landlord should be doing everything possible to retain your parents, and perhaps extend the lease term - but at a lower rate. Note that for most landlords it is more costly to replace a quality tenant than it is to grant necessary relief.

Very truly yours,
Steve
Stephen A. Cross, CCIM
steve@crossrealty.com