I got a call today from a small retailer in Las Vegas who was referred by a friend of his in San Francisco. (How does this stuff happen?) He has two businesses in an outlet mall on Las Vegas Blvd. Foot traffic is down to a trickle and his sales are down by 60% since the pandemic. Property management has been pressing him for past due July rent. He wanted to strike a deal for a reduction but they weren’t offering any more relief than a rent deferral which just would have put him in a deeper hole. He called me for advice.
I listened to his story: he had been a merchant in the center for 10 years, worked hard, merchandised well, and faithfully paid his rent without fail. He couldn’t pay his rent now and wondered what his options were. He felt like a deadbeat and hated it.
He is no deadbeat. To the contrary, he is a model tenant. I suggested he propose paying the landlord pure percentage rent – a set percentage of his gross monthly sales until mall traffic returned to normal. This would keep his rent sustainable whether his sales went up or down.
He appreciated my advice but wanted to know if I would write the letter for him because ‘I was the voice of authority.’ While I was flattered, I explained that getting a letter from an unknown third party – from Los Angeles, no less – would only aggravate the landlord. I told him “the authority is you. You know your business and have proven it month in and month out over ten years. Tenants bigger and smaller than you are just quitting but you are fighting for your business.” Not quite convinced that his words would have leverage, he said that his landlord was a big corporation. “All the more reason they do see the value in a tenant who works hard and respects the lease contract.”
He is going to write the letter. I suggested he start with a percentage that is a bit lower than what he can afford, just to leave him a little room to negotiate. I’ll let you know how it goes for him.
The universe looks after good tenants.