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‘In the same boat’: Retailers and landlords find some flexibility amid the crisis

Many retailers and restaurants that have closed due to the coronavirus are trying to negotiate rent relief with their landlords.
Many retailers and restaurants that have closed due to the coronavirus are trying to negotiate rent relief with their landlords.David L. Ryan/Globe Staff

First the customers disappeared. Then came layoffs, reduced hours, orders to shut the doors. Now, the rent is coming due.

March has been a brutal month for restaurants, retailers, and many other small businesses across Greater Boston as the coronavirus crisis has emptied main streets and town centers that bustled just three weeks ago. On Wednesday comes April 1, and for many businesses one of their biggest bills: rent.

That looming deadline, and the life-or-death decisions it can entail for a small store or restaurant, are prompting a lot of conversations between business owners and their landlords. And in many cases — though not all — that’s sparking a newfound flexibility when it comes to the rent, at least for now.

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A number of prominent Boston-area property owners say they are reducing or deferring April’s rent for small-business tenants, who’ve been clobbered by the COVID-19 outbreak. Some are canceling it altogether, and hoping that by the time May rolls around relief will have arrived from Washington or Beacon Hill to help companies stay afloat.

“People have difficult decisions to make right now about staffing and food orders and unemployment,” said Noam Ron, a partner at Hudson Group, which owns several buildings in the Leather District and is offering breaks to many restaurant and retail tenants. “At least we were able to give them a little bit of a relief valve on rent.”

It’s a smart move, say real estate brokers who’ve been in the middle of many of these conversations over the past few weeks.

Landlords who take a hard line now risk killing off their own tenants, leaving rempty storefronts when this is over, said Jesse Baerkahn, president of Graffito SP, a retail brokerage. Some state or federal help is likely; it just hasn’t arrived yet. And practically speaking, he said, what do landlords of businesses that are strapped for cash during good times expect to get now?

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“When it comes to a lot of Main Street retailers, we’ve been telling our clients they’re not going to get April rent anyway,” Baerkahn said. “There’s just no money there right now.”

But, Baerkahn and others said, this moment of mercy is fluid, and applies case-by-case.

After all, some retailers — drug stores, for instance — are doing fine, and larger chains may have reserves to ride out the downturn, at least for awhile.

Cheesecake Factory raised eyebrows last week when the restaurant chain declared it simply would not pay April’s rent for its roughly 300 locations, including several in Greater Boston.

There will be tenants who try to take advantage of this situation, said Corey Bialow, a Boston retail broker and commercial landlord himself, and blanket rent write-offs carry risks. That’s why you treat Starbucks and a small local coffee shop differently, for instance.

“There’s no one-size-fits-all approach here," Bialow said. “Everyone’s got to be realistic.”

And just like tenants, landlords, too, have bills to pay.

The owner of GTI Properties, Mario Nicosia, decided to waive April’s rent entirely for dozens of retail, restaurant, and art gallery tenants in buildings his company owns in the South End. That cost “hundreds of thousands of dollars,” said director of operations Bradley St. Amand. But when GTI asked its bank, a large national lender, if it could defer principal payments and just cover the interest on its mortgage for a few months, the answer was a flat no, St. Amand said.

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“We’re in a tough spot too,” he said. “But we’re trying to help our tenants as much as we can. Ultimately, everyone’s in the same boat here.”

That has some small-business advocates urging relief for landlords, too. Cambridge’s Central Square Business Improvement District, for instance, is leading a coalition of local business groups seeking — among other things — property tax breaks for landlords who offer rent rebates to their tenants.

While large property owners may be able to ride out a few months of reduced rent payments, their smaller neighbors can’t as easily offer tenants that wiggle room without knowing they’ll eventually be repaid.

“A lot of smaller landlords are essentially small businesses, just like their tenants,” said Michael Monestime, executive director of the Central Square BID. “Some of them are hurting, as well.”

That can lead to fraught negotiations. It was just in February when Gena Mavuli opened Create: Art and Community in Roslindale Square, hoping to build a neighborhood spot where toddlers can take drop-in art classes and grown-ups can dabble in pastels.

Then the pandemic hit. Mavuli closed her doors and quickly pivoted, selling art bags to keep home-bound kids busy and hosting drawing classes on Zoom. But she still has rent due on that Roslindale storefront. Her landlords seemed empathetic and offered her a break in April, but said she’d have to pay it back in June.

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“I don’t know if I’m going to be open in May,” Mavuli said. “There’s not this sense of humanity and the fact that we’re all in this together.”

A few phone calls later (including one from the Globe), and Mavuli and her landlord had worked out a deal, for a while anyway. But how long such flexibility can last is anyone’s guess. The bills, after all, have to be paid eventually.

"April will be hard. There’ll be some contentious conversations,” Monestime said. “But if this drags on to May, June, beyond, that’s when things are going to get really uncomfortable.”


Tim Logan can be reached at timothy.logan@globe.com. Follow him on Twitter at @bytimlogan. Janelle Nanos can be reached at janelle.nanos@globe.com. Follow her on Twitter @janellenanos.