Robert C. Weiss, a member of our Real Estate and Business & Finance Groups, will speak to a meeting of the Provisors networking group on August 14 about the ways Covid-19 can impact real estate contracts and transactions.
The pandemic, and government-mandated business shutdowns aimed at limiting the effects of the virus, have cause dramatic and widespread economic turmoil, Weiss points out.
The U.S. economy is projected to contract by 8% -- a reduction of one dollar in every 12 of economic activity. Unemployment was over 11% at the end of June, which was actually an improvement over prior months.
More than 24,000 restaurants have had to close their doors at least temporarily, along with thousands of retail stores from neighborhood shops to major chains such as Brooks Brothers, Penny’s, Sears, Guess, Microsoft and many more.
Office vacancies have risen sharply, and are expected to remain over 20% for the next four years. A major office tower in Los Angeles recently sold for a third less than it’s valuation one year ago.
Hotel occupancies average below 44% by one estimate, far below a level that allows profitable operation.
The result of all this upheaval will likely be a flood of litigation between landlords and tenants, according to Weiss. Because of the time, cost and distraction involved in courtroom battles, a preferable alternative is to negotiate a resolution of these disputes.
While such negotiations typically benefit both sides, they should not be undertaken without input from expert advisors, careful documentation, and consideration of market conditions and the requirements of lenders and others affected by these leases, sales contracts and other transactions.
More information from Bob's presentation will be available here after August 14th.