Five Considerations for Retail Operators

March 24, 2020

Mike MacClary is Co-Chair of Burns & Levinson’s Real Estate practice group. Mike’s practice focuses on retail leasing and general commercial real estate. He represents commercial tenants, including restaurant owners and franchisees in various retail industries, as well as landlords in Greater Boston. He also has extensive experience with retail, office and warehouse leases and subleases. He can be reached at mmacclary@burnslev.com or 617.345.3305.

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It’s a difficult time with significant challenges facing retail operators. Whether it is social distancing, states of emergency or mandatory business shutdowns, businesses need to understand their rights and responsibilities during the COVID-19 pandemic:

1. Communication is key. You are better off getting out in front of the situation ASAP. Reach out to your landlord to discuss options regarding rent payments. If your lease is triple net, perhaps offer to pay base rent but forgo CAM payments. Request that April and May rent payments be postponed until you are operational again. Some major commercial landlords are already offering this to tenants before the request is made!
2. Review your leases. Understand what is at risk if you end up defaulting. Is there a security deposit? Have you personally guaranteed your lease? What can you remove if you leave early? Many leases prohibit you from removing anything affixed to the space while others require you to remove anything that you installed. If being dark for 90 days will shut down your operations, you should know the implications of not reopening.
3. Reach out to others. Contact other tenants in the same building or development. Have they heard from the landlord? What kind of a deal have they struck? Perhaps team up with a neighbor to approach your landlord. Strength in numbers!
4. It will get worse before it gets better. Retailers are typically an optimistic bunch so planning for the worst isn’t always front of mind. Now that we can’t congregate and perhaps very soon be outside at all, what are your alternatives? Can you pivot to a take-out arrangement? What about a delivery only set up? Make sure someone in your business is the point person on the local, state and federal regulations regarding dealing with the virus as well as monitoring the CDC and WHO. The information is coming at all of us very quickly and you must be prepared! 
5. Remember who got you here. Keep your team apprised of your every move. Your employees need to feel as much as part of the business now as they were a month ago. Keep your advisors close and lean on those who you sought advice from as you were becoming successful. Arrange video meetings with those who you don’t see daily. Even reach out to former colleagues or employees who may have moved on but could be good sources of advice during these difficult times.

As we brace for the daily news updates, we will endeavor to provide you with the latest insight and ideas to help us all weather these tumultuous times.