After a laundromat in Manhattan said it couldn’t pay its monthly rent in April and May, the property’s manager asked for half of the $7,200 bill, while also allowing another struggling tenant, an electronics repair store, to pay a third of its $12,500 monthly rent. A nearby clothing store in the Chelsea neighborhood had its $10,000 rent cut 50 percent.
The drastic reductions are part of a desperate effort by landlords to stave off vacancies even as revenue plummets and taxes, utilities and other costs erode their own reserves.
“We kind of just take what we can get and work out a number,” said the laundromat property’s manager, Aaron Weber, whose company manages nearly 40 commercial properties in Manhattan. “As long as they are paying something, we’re happy.”
Yet with thousands of small businesses that are a staple of city life unable to pay basics like rent during the pandemic, that has set off an extraordinary crisis for landlords, who have lost tens of millions of dollars in income since New York City’s lockdown began in March, analysts said.
Landlords face an unpleasant choice: Forgive or lower rent payments even as their own bills pile up, or hold firm and risk losing a tenant who may not be replaced for months or even years.
Even as some landlords are cutting rents, others have not considered any compromise, going so far as to threaten tenants with lawsuits even if a business faces permanent closure.
“On the tenant side, the stakes are a massive wave of not temporary but permanent closures, which will mean damages to personal credit scores, many lost jobs and all the ripple effects,” said Ari Harkov, a broker who has worked with commercial landlords and tenants. “On the landlord side, you’re talking about potential foreclosure, you’re talking about people defaulting on their loans, not being able to pay their bills.”
He added: “That could be very, very painful for New York.”