I spoke with a small business owner this morning. Like many of us, he's struggling economically throughout this COVID-19 pandemic. He shared a story about his ordeal with major landlords in Ontario that I'd like to amplify with an entry here.
I'd like to keep this individual's identity private, so I'll be referring to him as Brad. Brad's business can be found in several Ontario malls and they've been closed since mid-March. They'll be closed indefinitely as they're not an essential service.
As of this writing, the malls he pays rent to have been offering April rent deferrals. That means he wouldn't have to pay rent in April, but would still have to pay 100% of April's rent later in the year, in addition to his regular rent. As an SMB, the lost revenue from this indefinite closure makes that impossible.
Brad is looking for rent relief during this pandemic, either from the landlords, the government, or a combination of the two. Thus far, there has been no relief whatsoever. He tells me that even large companies like Canadian Tire are asking for up to six months of rent abatement.
Here are some quotes from Retail Insider that sum up their situation nicely.
An executive for a well-known Canadian retail chain said the public relations staff for several major Canadian landlords should be fired for allowing the landlords to handle this crisis the way they have so far.
The executive said those major landlords are well-funded through pension funds for example, and while many retailers closed their doors initially, shopping centres did not.
“You would think they would be stepping up and trying to keep their tenancy as healthy financially as possible and certainly a rent deferral does nothing. Look, if I have zero revenue in a location and I have rent whether I pay that rent now or by year end is irrelevant. I still have zero revenue for two months. It’s a help in the short term for cash flow but it really does nothing,” said the executive.
“At the end of the day the retailer is taking it on the chin and retailers have stepped up. So many of them committed to paying their associates for a period of time. We’re reaching the end of that time now and you’re starting to see layoffs. But where’s the landlord version of stepping up?”
So many of us are hurting financially right now. I know many who have been laid off, are making a fraction of their typical income, are completely out of work or have had to take a reduction in pay. And it's going to get worse before it gets better. We all need to show patience and mercy during these unprecedented times... landlords included. Landlords, especially.
