As a result of the pandemic, many employers have found remote or hybrid work arrangements to be both desirable and profitable on a long-term basis. The move from on-site and fully-staffed offices has raised concerns among commercial landlords regarding their means of generating income and the viability of their businesses, as many tenants have chosen not to pay rent or have broken their leases entirely. However, businesses in the growing technology sector may be commercial landlords saving grace.
Tech Companies Return to the Office
Industries that thrive on collaborative work methods, like many technology companies, do not function as efficiently in remote work settings, and are eager to return to full, in-office work schedule.
While commercial leasing activity for office buildings declined drastically in 2020, tech companies, such as software and e-commerce companies actually leased more office space than any other industry. In fact, tech remained the top office-leasing industry. Many tech companies, which were centered in Seattle, Manhattan, Washington, D.C., Atlanta, and Austin, have actually expanded and relocated throughout last year.
This renewed interest in office leasing could be crucial for commercial landlords to get back on track after a difficult year. Not only do technology companies operate with much larger budgets than most, but they are also typically the most adaptable to remote work, making it quite noteworthy that they are opting to lock themselves into full lease terms.
Other industries, such as finance, have also been leaning towards a more office-based structure in the future as opposed to remote work. As vaccines continue to be rolled out throughout 2021, it is likely many other industries will return to a full in-office schedule.
Difficult Road for Commercial Landlords
Despite a business bounce back on the horizon for many commercial landlords, it is unlikely to be a quick fix. Many landlord-tenet relationships consist of a tenant, who is much larger with a higher revenue, while the landlord is a smaller operation that relies on regular rent payments to stay afloat.
Some of the unfortunate consequences of this relationship during the pandemic were large-scale lease disputes. Such was the case with Starbucks and The Gap, where the landlords were taken advantage of by these powerful, high-value tenants that chose not to pay rent. Some tenants opted to break their leases entirely, which made matters worse for landlords who were already dealing with more vacancies than normal.
While relief may be closer for commercial landlords this year, it will still likely be a slow process for them to regain normalcy. When these unfortunate events occur, it’s important commercial landlords consult with experienced legal counsel to ensure their rights are protected.
Commercial Lease Dispute Attorneys
At Raizner Law, we work with business owners and landlords to protect their livelihoods from lease disputes. If a large tenant is not paying rent for space in your commercial property and they owe you unpaid rent, our attorneys can help. Contact us today to learn more about how we can assist your business.