Directors at Newmark Knight Frank’s office in Downtown Los Angeles said that rent payments during April, May and June went largely unchanged as tenants used funds from the Paycheck Protection Program. However, landlords are expressing more concern about the coming months.
Jennifer Frisk, one of the directors at Newmark Knight Frank, said that many landlords have office rent deferrals, but not total renegotiations yet.
“The market still lacks significant data points since not as many deals have been transacted over the last few months,” said Frisk. “I think we are still waiting to see the impact of the PPP funds going away, in conjunction with many moratoriums being lifted, to see how both tenants fare without financial assistance, and how landlords react.”
Director Ryan Harding added that industries who needed rent deferrals were likely ones that were already suffering prior to the pandemic.
In regards to coworking tenants, Frisk says that clients that are utilizing these shared spaces are either trying to get out of leases, or are simply not comfortable going back to them. Coworking spaces are traditionally open offices with plenty of shared desks and other amenities, so Frisk agrees that there will need to be big changes in the coworking model.
“Coworking will stay because it provides something that is flexible when you look at the difference between traditional real estate, which is why it was so successful,” said Frisk. “So, I think the flexible work space model will stay, but I think it will evolve from what it looked like before quarantine.”