Contributing editor Anna Robaton spoke with thought leaders from different corners of the industry, and all agreed on at least one issue: There are no perfect historical parallels for the COVID-19-induced downturn. Our series on lessons learned during recessions continues with ...
There is really no precedent for our current situation, at least not in my professional lifetime. For me, perhaps the closest parallel is Hurricane Andrew, which hit South Florida in 1992, shortly after I developed CocoWalk. In the aftermath of Hurricane Andrew, retail sales were mostly confined to essential goods and services. After Andrew, millions in federal disaster relief poured into the local economy, and we borrowed against the future, much like we’re doing now with federal stimulus programs. But our current situation is unprecedented in terms of the unilateral breaking of lease obligations among tenants. The only way we work our way out of this crisis will be through close cooperation between landlords and tenants, totally unscripted by the leases.
As landlords, we need to try to give tenants as many concessions as we can afford to give. Yet tenants also need to understand that we need to keep money coming in to cover our fixed expenses as much as possible.
Tenants as a group will also have to help each other. A tenant who can afford to keep paying rent should pay, which, in turn, helps us give breathing room to tenants who can’t pay. We are in a situation where the group — in other words, tenants and landlords alike — has to function as one body. The lung cannot say to the kidney, ‘Sorry, you are sick, so you’ll die and I’ll survive.’ We have to be in collective survival mode.
With many people stuck at home, nature seems to have taken over during this pandemic. That will create a push toward more environmental responsibility, both in terms of the way we operate centers and how we curate our tenant mix. When I was growing up in Istanbul, my father used to say, ‘We’re not rich enough to buy cheap things.’ A Louis Vuitton bag was not necessarily a status symbol; it was a product built to last. I think we are returning to an era where we’ll wear things until they wear off. This trend, which has given rise to resale concepts, will just grow stronger.