Real Estate Investor Magazine South Africa May/ June 2020 | Page 36

RETAIL
Landlord-tenant battle
during Lockdown
NATHALIE SCHOOLING
T
he negotiations between landlords and large retail
tenants during the Covid-19 lockdown period has
been heated, with landlords trying to convince
tenants to still pay rent.  Some tenants believe that they are
within their rights not to pay rent, while landlords argue
that this is unlawful. 

After some back and forth, the real estate representative
bodies including the South African Property Owners
Association, the SA Council of Shopping Centres and the
SA Reit Association finally launched a rental relief initiative
where landlords would effectively surrender at least R2bn
in basic rent and operating costs.

While this may have been a show of goodwill, it is also
a sign of how important tenants are for landlords. Without
tenants, landlords cannot exist. Without retailers and
service providers, there is no economy.  It’s important for
landlords to remember that their tenants are essentially
their customers and not just rent payers or lease holders.

Given the weak SA economy, a lot of larger property
companies likely turned to asset buying abroad and are
now carrying debt. It can be argued that this is one of the
reasons they wanted to hold onto cash when the lockdown
was first announced.  But it is not the responsibility of the
tenant to shoulder this burden. The client needs to be
put first if property groups stand a chance of long-term
survival.

For too long, the tenant has been treated merely as a
paycheck, resulting in a master servant relationship. In
some cases, tenants can feel bullied by their landlords,
having to adhere to non-negotiable requests. My advice
to landlords is to always listen to the concerns of their
tenants, not only during times of crisis.

Property sector not immune to the customer-centric
business model
A big problem in the property sector is the disconnect
and trust between the tenant and landlord. Unfortunately,
many landlords don’t view the tenant as a client, who has
spending power. This is especially apparent in the retail and
commercial space.

Often, top executives in retail property management
organisations as well as ‘owners’ have no direct
communication with their tenants, leaving it to mid-
management to form these relationships. Trust is built by
using a customer-centric approach, which has become
the number one -method used across business sectors, to
obtain competitive advantage. It’s time the property sector
got onboard with this approach, and fast.

For landlords to retain a ‘client base’ post Covid-19
then the way they treat tenants is vital. Empathy is a key
principle in customer experience (CX), which sadly research
has shown many business leaders are lacking. 

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MAY/JUNE 2020 SA Real Estate Investor Magazine
Legal clarity & proactive communication 
Since the start of the Covid-19 pandemic, there has been
a lot of misunderstanding around rent legalities and
exemptions, so I urge landlords to learn from this, and be
legally thorough in future; to seek clarity on issues on both
their own and their tenant’s behalf. Legal squabbles over
rent, such as those highlighted during lockdown, only
waste time and money for all parties.  Ultimately, it’s win-
win solutions that save the day.

Engaging in proactive communication with tenants
also needs to be top of mind. In times of crisis, rather
overcommunicate than stay quiet and hope it will all just
blow over. It’s in the hard times that landlords can build or
even repair relationships with their tenants. Showing that
they understand their pain points can pave the way for
long-term benefit.

I encourage landlords to always put themselves in their
tenant’s shoes. Yes, landlords have salaries to pay and
large operating costs, but so do tenants. Covid-19 and
specifically the lockdown period put businesses into a state
of shock, and it’s our reaction to it that determines our
survival.

The future of the landlord-tenant relationship
 Post Covid-19, I suspect that many businesses will rethink
how they work, and potentially scale down their space. 
Retailers will also need to innovate, which again can mean
rethinking leases and floor space, so it’s in the best interests
of property companies to go the extra mile for tenants
right now.

The best solutions will always be conceived on a case-
by-case basis between landlords and tenants.  No one was
prepared for Covid-19 and hence we have seen a diverse
number of responses from tenants across the spectrum.

But this means that landlords should welcome input
from their tenants, no matter how big or small, and to talk
to them about their challenges in this viral pandemic. They
should also keep in mind that Covid-19 has entered SA
at a time when the economy is barely growing and some
people, especially the working class, are more vulnerable
than ever.

There is much to be said about the future of the
landlord-tenant relationship. It is a fragile one that requires
open cards and mutual trust. I hope to see both parties
emerge stronger when we recover from this crisis.
SOURCE nlighten
NATHALIE SCHOOLING CEO of nlighten,
South Africa’s leading multi-disciplinary
Customer Experience (CX) Specialists. Schooling
is a sought after CX strategist and facilitator, with
over 25 years’ experience in the customer service
and client experience industry.
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