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Pasadena Broker Urges Retail Landlords To Offer Rent Breaks In COVID-19 Crisis

Published on Monday, March 23, 2020 | 7:56 pm
 
Bill Ukropina

Businesses that have been severely hurt or closed altogether by the economic impact of the coronavirus crisis can lay off employees or cut costs in all manner of other ways – but one cost that won’t go away is rent.

It comes due every month, whether a business is booming or shuttered or somewhere in between.

Now — with some city leaders fearing that many businesses won’t survive and reopen after the COVID-19 crisis passes — one prominent Pasadena commercial real-estate broker is urging retail landlords to bite the bullet and offer reduced rents, at least temporarily, to tenants who have been affected economically.

“For those tenants that have been consistently paying rent on time if requested, we advise you to give them a reasonable rental concession,’’ Bill Ukropina, managing director at Coldwell Banker Commercial in Pasadena, wrote last week in an email to what he estimated was 82 or 83 local commercial property owners and others in the industry.

In an interview with Pasadena Now, Ukropina stressed that his unsolicited advice was coming solely from him, and that he was not speaking on behalf of the vast Coldwell Banker company.

He urged landlords to be “empathetic, courteous and thoughtful.”

“This crisis is affecting many tenants, especially retailers’ abilities to pay landlord’s rent,’’ he wrote.

“Many of you receiving this letter are making hundreds of thousands or more of annual net income from buildings I have sold you the past 35 years. It is time to be empathetic to your tenants. You should listen carefully to your tenants’ requests for rent reductions or other concessions.’’

Ukropina said that, beyond the obvious goodwill of reducing rents, it also makes good business sense.

“This temporary crisis will pass and I sincerely believe landlords who are empathetic, courteous and thoughtful will benefit profusely in the future,’’ he wrote.

“This is because most of your tenants will appreciate the temporary financial concession, will survive this crisis, and appreciate what you did for them. Plus, you will have a better chance to renew their lease in the future.’’

Ukropina noted in the email that one of the landlords he represents had a tenant paying $27,800 per month when the COVID-19 crisis struck and crunched the woman’s retail business.

That’s a situation that will only get worse, and wider, in the coming weeks, following “Safer at Home” orders from the city, county and state that require all “non-essential” businesses to close until at least April 19.

“I immediately met with the landlord and we agreed to reduce her rent by 50 percent to $13,900, for a period of two months, this April and May,’’ Ukropina wrote. “We also agreed that the tenant would pay back the landlord half the reduction, (half of $27,800 = $13,900) within one year.’’

That renter was hardly alone is taking a huge hit during the coronavirus crisis. Earlier this week, five prominent Pasadena restaurateurs met with Councilman Victor Gordo and reported that, since the crisis began, their businesses have fallen off by between 65 percent and 80 percent.

While Ukropina urged retail landlords to be empathetic, he also urged caution.

“Some tenants use these challenging times to receive a rent reduction when they don’t need it,’’ he wrote. “Listen to their needs carefully and use your best judgment regarding what to offer, if anything. You do not have to decide the first time you talk to your tenants … you have the right to state that, ‘I will respond back to you.’ ”

Ukropina’s letter came a few days after the City Council approved an eviction moratorium, safeguarding both residential and commercial renters for non-payment if those renters have been affected economically by fallout from the pandemic.

The moratorium will be in place as long as the city’s local emergency remains in effect – and while it prevents evictions for non-payments, it also requires that any unpaid rent be satisfied within six months of the city emergency being officially lifted.

Critics of the council’s move said that six months is an unfairly short amount of time for tenants who’ve been hit economically by COVID-19 fallout to recover and settle up on unpaid rents.

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