A group representing Ottawa’s business improvement areas is calling on the province to impose a six-month moratorium on commercial evictions to give tenants – many of which are fighting for survival – some breathing room ahead of the gradual reopening of the economy.
Mark Kaluski, the chair of the Ottawa Coalition of Business Improvement Areas, says business closures ordered to curb the spread of the novel coronavirus have left many of the 6,400 stores and services his organization represents with no source of income.
“So unless you’re going into personal savings or using the government loan program, you’re just not able to make rent,” he told OBJ on Friday, the same day real estate firm Colliers International said that 21 per cent of 7,100 retail, office and commercial tenants in its national property management portfolio requested rent relief in April. In Ottawa, the number of Colliers tenants asking for relief was even higher at 32 per cent.
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Kaluski, the president of financial consulting firm HashMark Financial, said some landlords have been issuing eviction notices already, “but I expect in the next few days, we’re going to see a lot more. Landlords are pushing to get the rent. It’s ugly.”
Kaluski said if the situation continues, many small business owners could be forced to eat up personal savings or even borrow against their home mortgages to stave off evictions and bankruptcies.
“It’s a bad ecosystem,” he said. “If landlords aren’t willing to take a little bit of a haircut to help their tenants out, then the whole thing falls apart.”
Letter to Ford
On Thursday, the coalition sent letters asking for a six-month pause on evictions to local MPPs as well as Ontario Premier Doug Ford and solicitor general Sylvia Jones. Kaluski said he’s hoping the campaign encourages more landlords to join the federal government’s Canada Emergency Commercial Rent Assistance program.
To be eligible for the program, landlords must be charging less than $50,000 in gross monthly rent and have a non-essential commercial tenant that has closed its doors or seen a drop in monthly revenues of 70 per cent since measures to control the pandemic were implemented.
Under the program, landlords are required to reduce rent charges by at least 75 per cent. They also must give up any profits on their rent for April, May and June and agree to a three-month moratorium on evictions.
Tenants must pay 25 per cent of their rent, while the federal government, sometimes in partnership with the provincial government, covers another 50 per cent.
However, Kaluski said not enough landlords are willing to take part in the program, leaving many tenants with no option but to default on their rent.
“Right now, landlords have all the power,” he said. “You can’t compel a landlord to apply for the commercial rent assistance program. If the landlord decides not to use it, there’s nothing a tenant can do.”
But John Duda, the president of real estate management services at Colliers, said many landlords are reluctant to sign on to the program until they get more details, including when the funds will start flowing and how it will be rolled out in each province.
“Until (landlords) have that clarity from the government, they cannot assume that the program will work for them,” he told OBJ.
Duda said he “would be surprised” if many landlords backed the BIA coalition’s call for a six-month moratorium on evictions, noting property owners have obligations of their own to creditors such as banks and utility companies.
“The landlords are in a business themselves,” he said. “They have bills to pay. If you look at, say, a grocery store, would you be asking the grocery stores to give away groceries for free? I think the answer would be no.”
Still, Duda said he sees some light at the end of the tunnel. Colliers saw an uptick in tenants who were able to cover April rent in the past few days, and he said he thinks federal relief programs and provincial plans to gradually reopen Canada’s economy are giving business owners some hope.
“I’m actually more confident now that the pieces seem to be falling in place,” he said.
Kaluski, however, said many brick-and-mortar businesses are in the fight of their lives, and not all of them will make it through.
“The Amazonification of the world was already happening before this, and (COVID-19) will just push things much, much more quickly towards basically an all-online world,” he said. “Even once things reopen, it’s going to be a long time before the economy gets back to where it was before this. I’m not optimistic a lot of businesses will survive unless there’s a new movement towards going back to the local economy.”
