COVID-19 and Commercial Leasing, Part II: Practical Advice for Tenants

On Behalf of Odin, Feldman & Pittleman, P.C. | May 13, 2020 | COVID-19, Real Estate

Although Northern Virginia, Maryland and DC are not yet ready to begin easing COVID-19 restrictions, business leaders are preparing now. What can landlords and tenants do today to survive a challenging second quarter, prepare for reopening, and emerge strong for the rest of 2020? In Part II of OFP’s COVID-19 Commercial Leasing Playbook, we focus on steps that tenants should be considering as they work together with all stakeholders to document a realistic short-term plan and remain flexible in the coming months.


Prepare and update your business plan, and reevaluate regularly:
Realistically evaluate your finances, consider future uncertainty, and prepare a plan for overcoming obstacles and moving forward.
Evaluate your space needs and how COVID-19 may change your office use and configuration.
Identify and implement changes to space configuration and use patterns to safely and effectively return to the office. Virginia Governor Ralph Northam has released recommended best practices for maintaining safe workplaces in all business sectors, which you can view here.
Consider available options for support or relief:
The federal government’s Paycheck Protection Program (PPP) provides a lifeline to small businesses struggling to remain solvent as much of the country shelters in place against the COVID-19 pandemic. Hopefully, you’ve already applied; if not, please contact us and we can discuss possible remaining options.
Read your insurance policy – most insurance policies only cover business interruption for a physical casualty, but if you don’t read it, you won’t know your options.
Consider the costs and benefits of challenging rent under theories of impossibility of performance and frustration of purpose.
Note special protections for DC retail tenants – click here
Read your lease and evaluate existing options.
Most force majeure provisions provide delays of required actions (such as opening or completion of improvements or repairs), but do not excuse or permit delays for payment of rent. You and your lawyer should evaluate your lease language.
Determine whether there are any terms requiring abatement for loss of access.
Evaluate the default and dispute resolution terms.
Present the plan to your landlord to support requested lease modifications.
Present a detailed plan to your landlord with a reasoned request for the rent abatement or deferral required for both you and your landlord to weather this storm; present your plan as necessary to strengthen both parties in the long run.
Be honest with your landlord, and be prepared to provide documentation to support a rent deferral or abatement request with a realistic repayment plan for deferrals.
Remember that your landlord has corresponding financial obligations tied to your payment of rent, so any abatement or deferral terms need to satisfy all parties involved.
Be prepared to offer something in return, such as extending the lease term, or improving the space to meet new wellness recommendations.
Request changes in services or amenities that will enable you and your employees to safely and confidently return to work in the building.
Document agreed changes in a signed written lease amendment.
While most of Virginia moves into Phase I of easing stay-at-home restrictions beginning May 15, Northern Virginia is not expected to enter Phase I until May 29, and Maryland and DC are expected to maintain existing restrictions. The commercial real estate attorneys of Odin Feldman Pittleman are ready to assist you with your specific leasing matters as you prepare for reopening.

For more information, contact OFP Shareholder Jennifer Banks at 703-218-2100 or OFP Shareholder Leslye Fenton at 703-218-2100

Disclaimer: The information contained herein is provided for informational purposes only and should not be construed as legal advice on any subject matter. This information contained herein is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice. Any information contained in this article is not intended to be a substitute for legal counsel. No one should act or refrain from acting on the basis of any content included in this article but should instead seek the appropriate legal advice on the particular facts and circumstances at issue from a properly licensed attorney. The author expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this article. This article contains general information and may not reflect current legal developments.