Just like renters, businesses are feeling the virus squeeze
Lucky ones are working out a deal with landlords and getting a break in rent
Unemployed workers aren’t the only ones struggling to make the rent.
Many Bay Area businesses, bludgeoned by government-ordered shutdowns and now a slow return of customers, are asking landlords for a break on rent as they try to recover from the pandemic-induced economic meltdown.
“Our business is down 95 percent,” said Balkar Tamber, owner of Sakoon Restaurant, which has locations in Fremont, Mountain View and Santa Clara. “The bulk of our business is banquets and catering, and those are down to zero.”
Tamber, a veteran of the restaurant business with 20 years of experience, is scrambling to negotiate rental payments with three landlords, one for each of his Indian restaurants.
“I don’t have any way to pay,” Tamber said. “I don’t know how long I can go on. It all depends on my landlords.”
For many small businesses, negotiating a deal with the landlord is crucial to their survival. It can be crucial for their workers too — without a break on rent, many small businesses can’t afford to hire back employees. An estimated 184,400 jobs in the restaurant, drinking and hotel sector were lost in March and April, the first two months of the shutdown.
Landlords, of course, have their own bills to pay, from mortgages to loans to monthly costs. How they respond often depends on their own economic circumstances.
Broderick Roadhouse, a bar and grill perched on a prominent corner in downtown Walnut Creek, was often packed from opening to closing. During the shutdowns, Broderick set up a table to take to-go orders from customers wearing masks, a familiar sight in the coronavirus age.
“We are probably doing less than 30 percent of our normal business,” said Rolla Ghaben, a principal owner of Broderick Roadhouse. She added, “Where is the light at the end of the tunnel? Sometimes it seems as if there is no light.”
Some landlords have provided extensive rent deferrals to tenants. That was the case with the Roadhouse.
“Our landlord gets it, they have been great, they are working with us, we are grateful for that,” Ghaben said. “We are just opened for outdoor dining with social distancing and masks. We know it’s a deferral. Nothing is free, and things will be put back on the table at some point.”
Not every business has been slammed. Mike Ralph, who runs a bicycle shop on Main Street in downtown Pleasanton,
said sales are up because bike-riding is considered a safe way to exercise and get outdoors.
“Our business is well up, about 50 percent,” Ralph said. “People are looking for new methods of recreation and still maintain social distancing.”
But the shutdowns hit other shops and restaurants hard.
Downtown San Jose’s San Pedro Square Market offered rent deferrals.
“We decided deferrals were the right thing to do,” said former San Jose Mayor Thomas McEnery, a coowner of San Pedro Square and one of the key architects of the revival of downtown San Jose. “We are trying to help people.”
San Pedro Square Market has been a Bay Area hot spot, with restaurants, bars, a coffee shop, dessert spots and a wine bar. When the shutdowns came along, San Pedro Square sent out a note saying that the rent for April, May and June would be deferred until the end of the year, said Kasandra Solano, manager of GameDay, a bar at San Pedro Square. “It definitely helps to have some of the pressure alleviated.”
Tenants are still being asked to pay a monthly fee for the common area maintenance, as well as a percentage of their sales.
“When a business is not being allowed to operate, it wouldn’t be fair to charge us rent,” said Carlos Zubizarreta, owner of Anchors, a seafood restaurant in the Square.
In Oakland’s Uptown district, Kyle Itani, chef and co-owner of Hopscotch Restaurant & Bar on San Pablo Avenue where business is down about one third, said his landlord also has deferred rental payments.
“Our landlord said we would figure it out later,” Itani said. “Eventually, we will have to pay.”
Jean Van Fleet, co-owner of Bibliomania in downtown Oakland, said online sales have kept the bookstore afloat. The store, on Telegraph Avenue in the Uptown neighborhood, halted in-store shopping in mid-March because of the local business shutdowns. At present, customers can come to the entry, request a book, and the owners can bring out the book if it’s available.
“We are still having to pay rent,” Van Fleet said. “We check the online orders that come in the email. That’s really our only income.”
In downtown San Jose, Ryan Summers, principal owner of Pizza Flora on South First Street, has been paying his rent to property owner Swenson, one of the Bay Area’s storied real estate development and investment firms. Swenson hasn’t offered any breaks on rent payments, according to Summers.
“They are being kind about allowing us to pay late,” Summers said. “But I still have to pay the rent. Maybe they aren’t charging interest or late fees. But they say we owe them the rent. No breaks.”
Swenson said it does not comment on lease negotiations with any tenant.
Some landlords are telling their commercial tenants to hang in there and not worry until operations stabilize.
“Our landlord is being very helpful,” said Jon Magnusson, owner of Nonni’s Bistro in downtown Pleasanton. “He said as soon as we get things going again, we can figure out something on the rent. I have stopped wondering about what’s going to happen. It changes every day.”
Similarly, the property owner for the building on Palo Alto’s California Avenue where Terun restaurant operates is helping out its struggling tenant.
Kristyan d’Angelo, executive chef and co-owner of Terun, said, “Our business is down about 80 percent. They told us to just keep working and that we would figure things out.”
The balancing act for property owners is delicate. In countless instances, commercial property owners must make payments to lenders that have provided a mortgage for a retail building or a mall. Rents provide the cash flow to help the landlord pay off that mortgage.
“We’re all in this together,” said McEnery, coowner of San Pedro Square. “We’ve seen a lot of ups and downs in downtown San Jose. We are just trying to be as optimistic as possible.”