HM Blog

Reducing Real Estate Expenses by “Restructuring” a Commercial Lease

David Marino on May 26, 2020

When the business community begins to open back up this summer, many business owners are going to look around at all of their excess space remaining from reductions in force and team members working from home and wonder what to do about it. With the business community taking the balance of 2020 to try and rebuild their organizations, there will be anemic demand for new office, industrial and retail space. At the same time, both sublease inventory and space given back to landlords from tenant defaults will flood the market. This combination of weak demand and spiking supply will cause commercial rents to crash, creating the strongest tenants’ market since the 2000 Tech Wreck. But how much will rents decline? 20%? 30%? The truth is that we don’t know how bad it’s going to be, but we will have clarity by Q3 and into Q4 of this year as to the extent that corporate America has been wounded. That damage is likely to extend into 2021 as companies continue to struggle to regain their financial footing.