“Overwhelming majority” of Brooklyn retailers asking for rent relief: report

About half of retailers made this request indefinitely, according to TerraCRG report

A deserted Brooklyn retail corridor along 4th Avenue in Park Slope (Credit: Google Maps)
A deserted Brooklyn retail corridor along 4th Avenue in Park Slope (Credit: Google Maps)

Retail tenants in Brooklyn are requesting rent help from their landlords in droves as the pandemic rages on and forces many stores to shut down indefinitely, according to a report from TerraCRG.

The report detailed responses from 80 retail property owners. About two-thirds of the landlords surveyed said between 75 and 100 percent of their retail tenants had asked for rent deferrals or forgiveness. About 12.5 percent said they received the request from 50 to 75 percent of tenants.

Almost half of the landlords said their tenants asked them for indefinite rent relief, while 37.5 percent said tenants asked them for an average of three months. And almost 80 percent said they had not developed a portfolio-wide policy for rent relief but were instead dealing with it on a case-by-case basis.

New York State halted all evictions on March 15 in response to the pandemic, but the state has not yet implemented any rules or guidance regarding rent moratoriums.

A common refrain in real estate since the pandemic picked up speed has been that tenants not paying rent would just be part of a chain reaction that could lead to landlords not paying their mortgages, which could in turn lead to bank failures. TerraCRG found a roughly even split when it came to retail landlords asking their lenders for more time to make mortgage payments, with 35 percent saying they had asked for more time, 36.2 percent saying they had not, and 28.7 percent saying such requests were still in progress.

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For the landlords who did ask for additional time, just over half said their lenders had “somewhat” worked with them to address their situation. Just 14.8 percent responded with an outright yes, and 33.3 percent said the lenders had not worked with them.

And most landlords were not especially hopeful about the situation turning around quickly, with more than 60 percent saying they were not very optimistic about a “V-shaped” economic recovery after the pandemic.

TerraCRG founder Ofer Cohen said his firm got the general impression that people on all sides of the retail equation were trying to be reasonable and accommodating during the crisis.

“Everybody has been trying to be very cooperative on both the tenancy and the ownership side,” he said, “and I think what this data suggests is that this is a very much market-wide problem.”

Retail had already been struggling before multiple “stay at home” orders forced businesses in Brooklyn and across the country to close their doors indefinitely. While Cohen said he does not think that the pandemic will lead to the end of retail as we know it, he did predict that it will spark at least some closures.

“The retail that did struggle, or the retail that was borderline struggling, I’m assuming that this event is definitely going to push them over the edge,” he said.