Report

WHAT DOES THE NEW NORMAL LOOK LIKE IN 2020?

Q1 2020 Vancouver Office 430-605 Robson Street Vancouver, BC 604.428.5255

New Westminster Office 350-522 7th Street New Westminster, BC 604.545.0636

Fraser Valley Office 210-8029 199th Street Langley, BC 604.546.5555

Victoria Office 403-535 Yates Street Victoria, BC 250.590.5797

Property Management Office 200-808 W Hastings Street Vancouver, BC 604.330.8295

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AND THE NEW NORMAL IN COMMERCIAL REAL ESTATE William Wright Commercial Real Estate Services  Q1 2020  3

As the world is learning as one; how do we deal with the impact of COVID-19 and what does the future look like as we adjust to

our new normal? Is social distancing here to stay? Does society not want to go back to operating and living within close quarters?

Does the travel industry see a quick bounce back or is the cruise

line business changed forever? No one has the play book on how all this plays out nor what the next 2 months, 6 months and even 1 year looks like, but what we do know is we are all experiencing the

effects of COVID-19 together. No country or industry is immune to the economic impact this virus has had around the world and what the new normal looks like we will again experience as one.

What options do Landlords and Tenants have during COVID-19 if rents are an issue?

CONSIDERATIONS FOR TENANTS Before taking any action, tenants are advised to

British Columbia has recently issued a ban on

on the implications of their potential actions, what

misunderstanding amongst many business owners. It

review their lease agreement and seek legal advice would constitute a default of the lease, and legal options available to their landlord.

eviction of tenants which has created major is important to understand that the ban, at this point

of time, only applies to Residential Tenancies and not to Commercial Tenancies which are governed by their lease agreements and common law.

SOME ITEMS THAT TENANTS NEED TO REVIEW ARE AS FOLLOWS: • Is the business considered to be a service that has been ordered to close or may it stay open with certain adjustments?

• What action or condition triggers a default by the tenant under their

lease? Tenants must remember that in many lease agreements, a

default, even if resolved, may take away future renewal options and 1st rights of refusals.

• Under what conditions can a landlord evict them due to closure of business?

• Would the landlord benefit from the property becoming vacant? Does the property have immediate development potential that the property owner would like to take advantage of?

• How much is the security deposit that the landlord holds and under what conditions can a landlord use it?

• What potential coverages are available to the tenant under their commercial insurance policy?

• What other options become available to the landlord if they close their business? ▶

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• Is there a “Force Majeure” clause in their lease

and if so how is it defined? Does it impact the

party’s performance requirements under the lease due to the current circumstances?

• What are the relief programs offered by the

Federal and Provincial governments for small

businesses? Increasingly many options are becoming available in the form of interest free

and low interest loans, payroll subsidies, tax deferments, and more…

OPTIONS AVAILABLE TO LANDLORDS AND TENANTS • Temporary Rent Reduction/Basic RentFree Periods

• Deferral of Rent: • Converting Basic Rent Leases to Percentage Rent Leases

• Rent Abatement • Landlord Loans • Use of Security Deposit • Subleasing

After reviewing the above, a Tenant should

assess their financial position and understand what best case and worst-case concessions they would require from landlord. As with landlords, tenants also need to understand that a win-win solution is required.

Tenant’s should contact their landlord and explain how their businesses are being affected and be prepared to provide financial data to support their claim. ■

How does Force Majeure impact future commercial lease agreements? FORCE MAJEURE: UNFORESEEABLE CIRCUMSTANCES THAT PREVENT SOMEONE FROM FULFILLING A CONTRACT

Does your commercial lease have this section in it, if it doesn’t; it soon could in the future. This

is a phrase that is found in most commercial leases but based on the impact of COVID-19 and the inability of tenants being able to pay their rents, this section will be including and

defined in most if not all commercial leases post COVID-19. For legal advice on that could

impact your lease, please contact your legal council and provide them with a copy of your lease for their professional legal definition and how it applies to your lease. ■

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SO 2320 King George Highway, Surrey $7,000,000.00

D SO L LD 625 Fifth Ave & 513 Seventh Ave, New Westminster $16,000,000.00

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8580 Greenall Avenue, Burnaby $6,150,000.00

3083 276th Street, Langley $1,215,000.00

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2296 McCallum Road, Abbotsford $2,450,000.00

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Recent Transactions

1965 Oak Bay Avenue, Victoria $4,400,000.00

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110-9637 137A Street, Surrey $1,299,925.00

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417-1080 Mainland, Vancouver $1,070,000.00

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Recent Transactions

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8580 Greenall Avenue, Burnaby +/- 17,063 SQFT

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9-12332 Pattullo Place, Surrey $1,250,000.00

645 Yates Street, Victoria +/- 5,813 SQFT

103-1680 Broadway Street, Port Coquitlam +/- 5,636 SQFT William Wright Commercial Real Estate Services  Q1 2020  9

INTRODUCING WILLIAM WRIGH PROPERTY MAN

HT NAGEMENT William Wright Property Management William Wright Property Management is a commercial management company offering retail, industrial, office, multifamily and strata management services for private investors, corporate owners and syndicators. Our clients benefit from our highly specialized, dependable and fiduciary portfolio managers, creating stress free commercial ownership. With creativity and vision, we create truly unique strategies maximizing property value to reach our clients long term goals.

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High Quality Tenants A comprehensive tenant screening process and retention policy ensures that you get tenants who pay on time, take care of their units, and rent for longer. Additionally, our management structure provides a unique advantage by using a multi-point contact system to improve communication and service level to tenants, which will allow for better tenant retention and return on investment.

Lower Maintenance and Operating Costs Proper maintenance and repairs are all part of keeping your tenants happy and enhancing the value of your investment. With William Wright Property Management, you’ll gain access to our in-house maintenance staff and building operators, as well as a large network of licensed contractors that will allow your investment to continue to grow its equity by maintaining long terms tenants.

Portfolio Accounting and Reporting Our in-house accounting team can assist with preparing customized monthly reporting, comprehensive financial statements, annual budgeting, rent roll, and tax form preparation. Additionally, we can customize your financial statement package according to your specific needs.

We Manage All Asset Classes MULTIFAMILY STRATA OFFICE

Lease Administration We can take care of preparing lease and renewal documents, collecting delinquent rent, and reconciling annual rental charges to lease terms and budgeted operating costs to actual costs. This will ensure your ability to recapture all operating costs and maximize the return on the building.

Preventive Maintenance We have extensive systems put into place to deal with maintenance and repair issues early on so that they don’t turn into more costly issues in the future. Through regular site inspections, detailed maintenance checklists and documentation, and recommended upgrades, you can ensure maximum efficiency while bringing a high services level and maintaining reasonable operational costs.

INDUSTRIAL RETAIL William Wright Commercial Real Estate Services  Q1 2020  13

SA LE 6520 Williams Road, Richmond $3,690,000.00

1250 Hornby Street, Vancouver $2,298,000.00

111 + 115 Twelfth Street, New Westminster Contact listing agents

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1257 Hamilton Street, Vancouver $4,798,000.00

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Featured Listings

750 Powell Street, East Vancouver $1,798,000.00

101-104 515 Chatham Street, Victoria +/- 902 SQFT – 2,085 SQFT

LE AS E 200-420 W Hastings, Vancouver +/- 9,000 SQFT

AS 104-8575 Government Street, Burnaby +/- 4,083 SQFT

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1132 Union Street Strathcona, East Vancouver +/- 4,861 SQFT

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6952 Merritt Avenue, Burnaby +/- 9,867 SQFT

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Featured Listings

104-8988 Fraserton Court, Burnaby +/- 3,066 SQFT

108-1190 Pinetree Way, Coquitlam +/- 2,722 SQFT William Wright Commercial Real Estate Services  Q1 2020  15

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For more information please contact our Vancouver office. sales@williamwright.ca | 604.428.5255