Michael Sauvage has a tale of two landlords. In his story lies an urgent question as the coronavirus ravages local economies:
Where should the burden lie?
Sauvage runs a few teriyaki diners around Seattle, called BB’s Teriyaki Grill. Like most in the restaurant business, he’s being bled dry by the government’s shutdown of in-store dining.
“Our sales are off 80%,” he said the other day as he was delivering some takeout teriyaki to the UW Medical Center. “I’m trying to be creative and just hang on here.”
So last month he asked his landlords for some help on the rent. The responses he got back floored him — both of them, in dramatically different ways.
His corporate landlord for his South Lake Union location, a real estate firm called LaSalle Investment Management that has $69 billion in assets, said no to any rent reduction. The company said it was “willing to consider rent deferral only,” but added the following caveat:
“Firstly, please agree (via email) to cover LaSalle’s legal costs as they work to evaluate your request. Initially this will be small dollars but would increase if they document a rent deferral arrangement,” reads an email to Sauvage.
That’s right. The $69 billion company asked the teriyaki joint to cover some untold amount in legal costs just to start talking about whether the rent could be late.
“I was so frustrated I couldn’t respond,” Sauvage said. “I’m a local small business trying to stay afloat and not lay off my workers. It’d be one thing if they’d just said ‘no.’ But we’re in the middle of a pandemic, and it’s like they’re trying to make a buck off of it.”
When he failed to pay his April rent, he got a delinquent notice. This said he had until May 1 to pay the full April amount, but that means he’d owe double rent then (with his restaurant shuttered for in-store dining now until at least May 5).
So that’s one landlord. What Sauvage heard back from landlord two surprised him even more.
BB’s has another location in the University District, in a building owned for decades by the Timberlake family. They’ve been doing dentistry in the University District since the 1940s. The patriarch, Wayne Timberlake, died last year, and the low-slung commercial building is run by one of his sons, Todd Timberlake.
“In consideration of the effect COVID-19 has had on the economy, with the U-District being particularly hard hit, the landlord will not be charging base rent,” the Timberlake’s property manager wrote to BB’s Teriyaki, in March. “Given that all restaurants are now closed down, Todd is not going to charge the base rent for either April or May.”
The tenants also include a nail salon, an Irish pub and the University Ave Barber Shop, which has been cutting Husky heads for 75 years (you can still get a “buzz cut” for only $14). All these businesses now are closed by the government’s order.
“It’s a lifesaver that the Timberlakes gave us all free rent,” Sauvage said. “It means so much to us during this time of need, and will not go forgotten.”
It’s probably no coincidence that landlord one is an out-of-state corporate conglomerate, while landlord two is a multigeneration local family, Sauvage said.
But he’s been mulling his experience, and wondering: What is the right course? It’s complicated because while free rent in a crisis is a remarkable community gift, it’s hardly an option for every building owner. It also can’t be sustained. April 1 apparently passed without widespread default around Seattle, but May 1 could be a different story.
The $2.2 trillion relief bill from Congress has a fund to help small businesses, though it’s mostly designed to keep paying workers. Tenants have also won short-term relief from eviction. There hasn’t been much similar help for landlords.
“If the government shuts down your business, you can’t be expected to pay rent,” Sauvage said. “But the building owners can’t take the whole weight either. So where should the burden lie?”
I don’t know the answer. It likely lies somewhere between the first-responder selflessness of the Timberlakes and the calculating “you pay our legal bills and we’ll get back to you.”
The difficulty, though, is that the continuum suggested by this tale of two landlords is playing out everywhere at once. It’s a pressure cooker building up to May 1, when the rent, again, is coming due.
“It seems like the government is going to have to intervene and help figure this out,” Sauvage said. It’s got three weeks.
ABOUT THE WRITER
Danny Westneat is a columnist for the Seattle Times.
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