Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/1286864
www.canadianlawyermag.com/inhouse 31 Longcroft cautions that while programs such as the CECRA program may smooth the market, a level of uncertainty remains. "It has a muffling impact on the level of anxiety in that market, but there is uncer- tainty in how it works and how it will be applied," he says. Planning the re-opening of businesses and potential privacy issues have been a concern for Chouinard, as new measures to protect tenants are being considered in some buildings, such as keeping a log of visitors, so legal consideration of those initiatives was required by Chouinard and his team. Suess is also keeping a close eye on government programs, and she and her team keep in close contact with tenants. "We look at every tenant on a case-by-case suffering so rent deferrals have become commonplace. The legal department at QuadReal is supporting the company's business team, which has been focusing on regular communication with tenants and new initiatives to help them during the downturn, including the federal government's Canada Emergency Commercial Rent Assistance program, which was unveiled in April to offer rent relief to small businesses. "We have approached this from the beginning by really being close to our tenants and thinking about how we can help them," says Chouinard. "For instance, lower occu- pancy levels in our office buildings has meant savings could occur in areas such as utilities. Where applicable, we have passed along these operating cost savings to tenants." basis, which is very time-consuming when you are dealing with thousands of tenants," she says. "We have looked at deferral arrange- ments for a number of our smaller, indepen- dent retailers, and there are different considerations when you are dealing with larger national tenants." Longcroft advises in-house counsel to watch closely for signs of insolvency, both within the company and in dealings with third parties. "Everything has a ripple effect. For every retailer that can't keep a store open, there is a landlord that can't make rent, so insolvency events will start happening," he warns. Although some landlords fear that demand for office space my decline as many employees have acclimatized to a remote working environment, Chouinard sees other compensating demand factors. "The trend for several years has been toward a smaller and smaller space per employee, but we think that might expand again now," he says. "We've had tenants tell us that they think they will need more office space in their premises to give employees more space around them. As good as technology is, the social interaction of working together in an office is still valuable and will continue to be." Suess agrees, commenting that while the configuring of space may change in many offices to allow for a staggered workforce and a greater distance between desks, she does not expect the demand for space to decline. "This is something we spend a lot of time discussing in co-operation with our tenants, because they are the ones who will dictate market trends," she says. Longcroft says it is too early to predict whether remote working will trigger a decreased demand for office space. If this does occur, he anticipates an active sub-lease market would develop. "Landlords are not going to let tenants simply walk away. They will want to keep them on the hook to get it sub-leased out, and there is a huge cost associated with that, so that will be an interesting dynamic to watch," he says. "As good as technology is, the social interaction of working together in an office is still valuable and will continue to be." Roger Chouinard, QuadReal Property Group