Like most restaurateurs, Michel LeChasseur has struggled since the pandemic blindsided him. He hasn’t taken a salary since March, hasn’t paid rent since April, and he’s not sure how he’ll catch up once this is over.
“In Burbank, we depend so much on the studio business. I was working on 16 TV shows, catering roundtables where the actors and writers would come together. That’s done. That’s all Zoom now,” said LeChasseur, who owns and operates MA’s Italian Kitchen in Burbank.. “I told my landlord there’s no way we can afford to pay the rent. It’s hard to make arrangements without having an end to this in sight.”
His landlord wasn’t keen on abatements or deferral at first, but after watching a number of beloved locales and institutions call it quits, he said they became more willing to negotiate. 
“Honestly, I’m one of the lucky ones,” LeChasseur said.
If you spent some time surfing the Instagram pages of restaurants throughout San Fernando Valley area, you might be inclined to agree. A lot will look like The Bellwether, a longtime Studio City hotspot that closed permanently, citing the high cost of rent as a primary reason.
“We have brainstormed and mapped out all scenarios to make the business work, but sadly, even running at 50 percent capacity, we cannot sustain the business,” wrote co-owners Ann Marie and Ted Hopson in a final September post thanking their patrons.
The pandemic undeniably altered our daily routines and created a “new normal,” from the way we spend time with others to the way we work, and society has been forced to rapidly adjust to these unprecedented circumstances. This includes the commercial real estate market, where the pandemic has had a snowball effect on landlords and tenants alike – a snowball which has grown big enough to trigger an avalanche in the prolonged absence of meaningful government aid. Those that manage to dig themselves out are emerging to a radically different commercial real estate landscape.
As a real estate attorney, I’ve watched as the growing health crisis and the resulting economic fallout upend the deal-making structures that have long been in place, resulting in a high degree of uncertainty.
In the early days of the pandemic, virtually all leases, purchase and sale transactions and financing transactions that we were working on hit the brakes. It put a big question mark on everything, and very few answers were apparent.
Like LeChasseur, many economically strained tenants stopped paying rent, as they were forced to close their businesses or otherwise severely restrict their operations. We’ve been contacted by tenants and landlords alike to discuss their legal rights and remedies with respect to the issues created by the pandemic. The wealth of new government regulations related to controlling the pandemic has also generated a flurry of client inquiries.
The crisis has lasted long enough that the general public and the business community have become inured to living and working during an ongoing pandemic. We’ve seen our transaction volume increase once again as investors and businesses carefully dip their toes back into the water.
Suburban office spaces will be popular given both the need and desire for less dense workspaces due to the virus. Companies now compete with the comfort and convenience of remote work while providing an environment that employees will want to return to and feel safe in. 
Many suburban and creative offices can easily accommodate the need for increased spacing and other health protocols, so the post-pandemic climate may work in their favor. On the other hand, traditional city offices and businesses with long term leases at conventional office spaces are likely to lose traction. 
The next few months will be especially tricky for businesses and investors as they deal with resetting property values and managing the real possibility of future lockdowns. Even more concerning is the reality that the problems in many areas of commercial real estate have yet to hit its peak. 
Absent direct governmental intervention involving all impacted commercial real estate stakeholders, we’re likely to see increasing lease defaults, increasing tenant evictions, increasing loan defaults, all eventually leading to inevitable foreclosures and other ownership transfers and disruptions.
We’re encouraged to see many landlords and tenants now agreeing to forward-looking contract provisions, mainly by virtue of tenants now enjoying a new degree of increased bargaining power. Landlords are agreeing to targeted rent deferral or abatement provisions if it means gaining a tenant at a property that likely would have remained unoccupied. 
We’ll have a lot of digging to do once the avalanche is over. But for tenants and landlords who can hunker down, there’s opportunity on the other side to make some fresh footprints.


Dan Brozost is a real estate attorney at Blackacre LLP in Manhattan Beach.