If you thought the outlook on shopping malls couldn’t get much worse, you were wrong.
Stores already hurting before the coronavirus pandemic hit may not survive the mandated closures to re-open. Many stores are expected to skip rent payments on April 1, according to the Los Angeles Times.
The city of L.A. has barred landlords from evicting commercial tenants for missed payments for three months, which could be extended to a year. Vulnerable landlords could find themselves in trouble if they miss mortgage payments.
Whether vulnerable or not, landlords must quickly determine how to weather the storm. Rick Caruso, who owns malls across Southern California, said that he will keep his 1,000 employees on the payroll throughout the shutdown and pledged to support tenants.
He said that government entities and tenant insurance companies need to bear some of the weight.
“It’s a partnership and the risk needs to be shared,” he told the Times. “We certainly are going to do our part.”
But many tenants and landlords could find themselves in conflict. Some tenants want their landlords to waive rent payments while their properties are shuttered.
Andy Nguyen, who owns a chain of ice cream shops, including one in a property owned by Irvine Company, said he was “not sending any checks, period,” after Irvine Co. told tenants they would suspend rent payments for three months, but that tenants would have to eventually cover those payments.