What the Rise in Landlord Defaults Means for You: Whitepaper Recap

With changing office dynamics in the wake of the pandemic, landlord defaults are on the rise. Hybrid work has led to a smaller average office footprint, and some organizations have opted for a fully remote model. As such, office buildings are reporting lower utilization. This trend, coupled with high interest rates for landlords refinancing, has led many landlords to default, either because they have no alternative or because it’s more economically sensible to do so.

This wave of defaults is expected to continue, and occupiers should act accordingly. There are a handful of precautions tenants can take to protect themselves in the event of a landlord default. Most importantly, tenants in the market should perform a highly detailed assessment of their potential landlords before signing on. This due diligence is now a critical step in the real estate process to minimize risk and understand tenant leverage. For the tenants who do opt to sign on with a landlord that has debt, there are negotiation tactics and key lease terms and that can protect you from risk.

Cresa’s latest whitepaper details the default process as well as recommendations and strategies for tenants to protect themselves in an uncertain economy. For more information on the state of the market and the accounting and financial tools available to you, reach out to Cresa’s seasoned team of analysts.