The Problem
In early 2020, our client moved into their new commercial property. After having a bit of bad luck with their previous property, they were excited to be able to get to work in their new location. They were committed to running their business out of the property for a significant amount of time, supported by the proper lease documentation in place. The proof of their commitment to the property could be found in the $100k they spent on fitting out the premises to meet their requirements.

However, due to inadequate property management on the landlord’s side, the tenant soon found themselves staring down the barrel of another sizeable issue at hand.

The first problem was one many businesses and property owners have had to face: Covid-19.
Foreseeing that this was going to be disruptive to their business, the tenant requested a pre-agreed Covid rental abatement in their tenancy agreement.

However, the property managers they had been dealing with never came back with an offer, leaving the agreement unfinalised.
Despite this, the tenant had gotten the keys to the property, moved in, and started conducting their business. The tenant repeatedly asked for rental invoices to be sent throughout the following year but never once received one from the landlord or their property managers. With no payment details, the tenant couldn’t make any rental payments. On top of that, Covid had turned out to be quite disruptive to their business, and they were unsure of what to pay, considering they never received a response concerning the rent abatements.

Cut to January 2021, when the tenant was greeted with an invoice for a full year’s worth of rental for 2020, without any rent relief included.

Frustrated and fearful of the total amount, the tenant decided to engage with Azure Property.

Our Involvement
Initially, our role was to resolve the Covid rental relief issue between our client, the property management company, and the landlord. However, after some digging, we uncovered more problems that needed resolving.

We realised that our client’s business had been running out of one large premise, and our client’s property was only accessible through the majority tenant’s site. There apparently were occasions when, due to the pandemic, the main tenant had reduced the number of people allowed into its site, which impacted our client’s business as they had relied on a certain amount of foot traffic that the majority tenant produced to help support their business. Moreover, the expected traffic had been put into consideration when their rent amount was negotiated at the beginning of their lease in 2020.

However, regardless of the foot traffic, our client should have never been on their own lease as they had no ability to trade independently as there was no independent access into their premises. They were completely reliant on the majority tenant for their premises to be open.

Azure decided that there was much more to negotiate than just the Covid rental relief. Our team went straight to the landlord’s property management’s general manager to start working towards a resolution for our client.

The Outcome
We were then able to negotiate a 20% rent reduction for the 2020 calendar year, negotiate COVID-19 rent rebatements, and rental abatements for when the majority tenant closed their premises unexpectedly. As a result of our involvement, we were able to save our client over $10k.

While we were glad to have such a positive outcome, we know that this all could have been avoided had we been involved earlier.
We strongly urge both tenants and landlords to seek the support of independent legal advice specialising in commercial property before heading into and ultimately signing any commercial property leasing agreement. It is, however, better to leverage the knowledge of a professional commercial property manager instead of trying to wrap your head around it yourself.