12A — September 25 - October 15, 2020 — M id A tlantic Real Estate Journal
M id A tlantic R eal E state J ournal
Trader of Rinnier Development represents buyer SVN Miller Commercial Real Estate ink 12,216 s/f mixed-use S
Whitty &Ford of MacKenzie CRE rep. tenant Murray of CREG arranges 3000 s/f lease at 210 Allegheny Ave.
TOWSON, MD — Chesa- peake Real Estate Group, LLC (CREG) has elevated 210 Allegheny Ave., a five- story, 30,000 s/f commercial office building situated in Towson to 87% occupancy with its recent 3,000 s/f lease to Blue Harbor Benefits, LLC. Christopher Murray , vice president of Chesapeake Real Estate Group repre- sented the landlord and Bill Whitty , senior vice president and principal of MacKenzie Commercial Real Estate Services and Henson Ford , senior real estate advisor, MacKenzie Commercial Real Estate Services represented the tenant in this transaction. Blue Harbor Benefits in- tends to locate from its exist- ing location on York Rd. by the end of the year. The com- pany provides a full range of benefit programs to individu - als and businesses including
ALISBURY , MD — Chris Peek, CCIM with SVN Miller Commer- cial Real Estate recently bro- kered the sale of 2330 Scenic Dr., Salisbury. Peek worked with listing agent Matt Trad- er of Rinnier Development . Peek represented the buyer, prominent regional developer Gillis Gilkerson, and Trader worked on behalf of the seller. As noted by Joey Gilkerson of Gillis Gilkerson , “We are thankful for the collabora- tive environment within our brokerage community. Peek and Trader worked together to make this transaction as smooth and seamless as possi- ble. We truly felt that Peekhad our best interests at heart every step of the way.” The high ceiling, 12,216 s/f office-warehouse building was previously occupied by RDI
210 Allegheny Ave.
There are three areas to be addressed with respect to rents: Past, Present and Future. There is no “One Size Fits All” solution. Different seg- ments of the restaurant indus- try had differing levels of pain. QSRs with a drive-thru could still do 80% of sales. Fast ca- sual operations were closer to 50% of sales. Full service with liquor was hit even harder, with catering hit worst of all. A white tablecloth restaurant with a $75-$100 check average simply cannot compete in the take-out market. A well-tailored solution needs to permit everyone to get thru the Covid-19, and the other challenges facing the industry. There will be a certain sharing of pain. It will require some belt tightening and some sacrifices. We will still need help from federal and state governments to help preserve jobs. With mutual understanding we can all emerge and survive. We can take solace in the fact that man is a social animal. We like to gather. We have been going to the market for over 4,000 years. But most of all, we know that people will still have to eat. We need to have restau- rants there to serve them. Paul Fetscher, CCIMCRX CLS is a commercial real estate broker with decades of experience in restau- rants and retail. MAREJ health insurance, dental and vision plans, and group life and disability coverage. The firm also performs executive benefit planning and insur - ance analysis among other services. “We successful executed our strategy to build long- term value in this asset by raising 210 Allegheny Ave. to best-in-class status within the Towson central business core and attracting strong creditworthy compa- nies to the building,” said Murray. MAREJ
2330 Scenic Dr., Salisbury
Wire and Cable Solutions. The building is located in the Northwood Industrial area and is a clean, turnkey solution
with both drive-in and dock- high access for users looking for prime office-warehouse space at a reasonable price. MAREJ
Are you ready for the “New Normal”?
recently reported the highest number of vacant stores ever. Restaurants and retailers are failing at an unprecedented rate, with more permanent closings to come. So, what’s a landlord to do? First is the realization that the tenant must have an oc- cupancy cost that is prudent. The rents that will be tolerable in the future, may not be, and probably will not be as much as the previous tenant was pay- ing. We are entering into an extraordinarily strong buyer’s market. Any restaurateur will be able to pick and choose among numerous turnkey op- portunities in the marketplace. Equipped spaces that used to command key money, tomor- row will simply be spaces that will be more likely to command some rent, any rent, sooner. Second is the need to be flex - ible in deal and rent structure. Several deals are currently being written with just a per- centage of gross sales until Covid-19 restrictions are lifted. Landlords used to have con- cerns about getting reliable sales figures. In today’s touch - less society, transactions are taking place via credit cards. Everyone wants the “miles” from their credit cards. So, re- liable sales figures can rather easily be tracked from credit card statements coupled with non-resettable grand total cash registers. Simply put, with the drastic
rise in labor costs, coupled with significant rises in insurance premiums, today’s restaurant cannot afford to pay the same rent they could a mere six years ago. Those that have survived the current crisis are unlikely to see any profits whatsoever this year and into next year as well. There is no precedent or roadmap for the present situ- ation. Some landlords have already defaulted to the posi- tion of “We have a lease. Pay me the scheduled rent.” Not so fast! Restaurateurs did not choose to be denied “Use and Occupancy”. What we have is a matter of Force Majeure. A typical clause pro- vides for: “Landlord and tenant shall each be excused from perform- ing its obligations in the event, but only so long as the perfor- mance of its obligations are prevented or delayed, retarded or hindered by act of God, fire, earthquake … riot, mob vio- lence … government action or inaction …or any other cause, weather similar or dissimilar to the foregoing, not within the reasonable control of the party or its agents, contractors or employees.” A landlord has the right to argue that in court ... and get on the end of an awfully long line. “Something is better than nothing -and sooner is better than later”. Preferably, parties
can come to the negotiating table and work out a solution. Restaurants throughout many nations have been or- dered to shut. If a restaurant has been forced to close, there is no question about it, the restaurant does not have the ability to pay rent. And, unfor- tunately, there is no certainty as to when this will be over! After an initial shutdown, the focus became figuring out how to cope. Restaurants that previously had 10% of their sales in takeout or delivery, soon had a 100% increase in that category. That meant they were only down 80% of their sales. Operators did their best to Pivot. They did meal kits, box lunches, produce & grocery de- livery services. Mercifully, east coast states and others have permitted delivery of alcohol. Try though they might, sales were still below normal, and staff had to be laid off. Not all retailers need as much help thru this. Grocery stores, pharmacies, and liquor stores have enjoyed above usual sales. But restaurants need the help most of all. A landlord with numerous tenants is faced with individ- ual negotiations. As a prepara- tion, it would be productive to have one meaningful negotia- tion with the lender. Interest only or forbearance would give himmore latitude to work with his tenants.
continued from page 2A Here are the brutal facts of the restaurant industry. Due to Covid-19, by April 30, 2020, 80% of the New York State restaurant workforce had been laid off or furloughed. Without help, almost 2/3 of all New York restaurants are likely to close by the end of the year. The majority of those believe they will be unable to last past October unless there is a strong federal program of ad- ditional financial assistance. Were it not for PPP (Payroll Protection Program), the ma- jority of all restaurants now would already find themselves closed permanently. The economics of the restau- rant industry have changed drastically. Comparing 2019 to previous years, sales were flat, commodity costs were up, but labor costs were way up. In 2014, the New York tip credit wage was $5/hour. No one who signed a lease in 2014 or ear- lier saw a $15/hour minimum wage coming down the road. Many leases have annual 2%-3% annual increases. The reality is, comparing the costs of living, the actual increase from 2010 to 2020 was a mere 1.63%/year, compounded. So, costs grew more than sales. There is no dismissing cer- tain undeniable factors. New York City and its surroundings are currently enduring grow- ing high vacancies. CBRE, the commercial real estate firm,
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