Edward M. Bloom quoted in Massachusetts Lawyers Weekly on how the commercial real estate industry is handling the impacts of the COVID-19 pandemic
Edward M. Bloom, partner in the firm’s Real Estate Department, was quoted in a Massachusetts Lawyers Weekly article on July 23, 2020. The article, “Commercial property bar dealing with impact of COVID-19” covers the implications of negotiating rent relief for commercial tenants trying to survive the COVID-19 crisis, as well as the long-term impact of COVID-19 on brick-and-mortar retail and the demand for office space remains to be seen.
Read the full article in Massachusetts Lawyers Weekly (subscriber content).
From the article:
“Boston attorney Edward M. Bloom, a past president of the Real Estate Bar Association, says he’s been fielding inquiries from both landlords and tenants about the obligation to pay rent during the period of a government-ordered shutdown. But Bloom points out that the force majeure clauses in most commercial leases don’t relieve a party of an obligation to pay money or rent.
‘Usually, the force majeure clause excuses the landlord and the tenant from undertaking non-monetary obligations,’ Bloom says. ‘But always the obligation to pay rent is excluded from the force majeure clause.’
According to Bloom, most landlords have realized that if they don’t provide some rent relief during the pandemic, the tenant will either go bankrupt or leave at the end of the lease term.
Under the circumstances, Bloom says landlords have been open to arrangements relieving the tenant from paying all or part of the rent for a set period, such as three months.
‘They don’t forgive the rent,’ Bloom says. ‘What they’ll say is that in three months you will start paying rent again and you will pay what you owe for these three months. In other instances, the landlord might extend the lease term.’
… Bloom says before the pandemic the office market was already roiled by the phenomenon of real estate companies such as WeWork that provide shared workspaces under licensing agreements. According to Bloom, social distancing requirements made the WeWork model of packing together employees from multiple employers into a shared workspace impracticable.
‘That was one of the hot new trends in the commercial office sector,’ Bloom says. ‘Now that business may be dying because of COVID.'”