Amid a statewide ban on dine-in service at restaurants and bars, many landlords are trying to work with such tenants to help keep them in business. While some are offering relief in the form of abated or deferred rent, one West Dallas landlord is going further, offering free base rent to its restaurant tenants for three months.
"All sides of the table understood their position and how they could help. We’re all truly in this together. While this will have a short-term impact on all of us, it was the longer-term view that prevailed," said Brent Jackson, president of Dallas-based Oaxaca Interests.
Jackson's company is the sole managing member of the ownership group behind Sylvan Thirty, a mixed-use development in West Dallas near the corner of Sylvan and Fort Worth avenues. Specifically, the company owns the nearly 50,000-square-foot detached shopping center located in front of the apartments of the same name. While Oaxaca developed the entire project, the apartments were sold in 2017 to Los Angeles-based Arc Capital Partners.
The shopping center opened in 2014 and is now home to more than a dozen tenants, most of which are local or regional. The center's nine restaurant or food-based retail tenants are the ones currently benefiting from the free base rent. However, each tenant is still expected to pay triple net, which includes taxes, insurance and maintenance costs. Jackson declined to say how much the gesture would cost the company over the three months.
"What I can say is that we were very cognizant to make sure that it was helpful enough for tenants and not just lip service. We wanted this to serve a purpose, not just be for show," Jackson said.
Three parties deserve credit for what has happened at Sylvan Thirty so far, says Jackson. The first is the ownership group's capital partners, who ultimately agreed to forgo base rent and agreed on the length of the relief.
"We started thinking about this early in the news cycle before it was announced as a pandemic. We saw what happened in China and took it seriously. We've been stress testing projections to find creative ways that allow us to still be solvent and cash flow positive, but also to help out," said Jackson. "We felt that this was going to take more than 30 days to get through. If we can get through the pandemic in the next few weeks, the financial recovery could take a full 90 days. We don't want to go back through this every month. It would be counterproductive and gets in the psyche of our tenants."
The second party are the tenants themselves.
"The goal was for tenants to step up, and they have. They've become even more collaborative than before and the bond that binds them is nothing short of spectacular. We had one tenant that had to furlough some employees. Another tenant has taken them on. A third tenant is helping one of its neighbors sell product because they have more shelf space. It’s a wonderful and moving thing to see," Jackson said.
Last but not least are the customers, who have continued to support the tenants at Sylvan Thirty. While Jackson wouldn't describe the center as being packed these days, he does say it remains active thanks to the community.
Though tenants say they're thankful for the offer, the incentive of free base rent hasn't allowed everyone to stay open at Sylvan Thirty.
"It's incredibly helpful, and we learned about it just before we closed that location. Traffic was down significantly, and we were operating at a loss," said Matt Shook, founder and CEO of JuiceLand. "All I can hope is that this will guide the decisions of other landlords that want to see our long-term success. We’re great tenants and bring a vibrancy to every center we’re in. We’re suffering a 75 percent decrease in revenue right now."
Shook not only decided to close JuiceLand's Sylvan Thirty location temporarily, but also 22 other locations across Texas. The company's store at Inwood Road and Lovers Lane remains open and has seen a bump in traffic.
Other tenants have remained open at Sylvan Thirty, but business is still struggling.
"We’re barely open. We have a walk-up window and are seeing less than 50 percent usual business. At least people are buying beans to take home," said Sean Henry, founder and owner of Houndstooth Coffee. "Anything is helpful at this point. No landlord has to do anything, so the fact that they’re helpful is frankly very nice. It's more than anyone else has offered so far."
More on WFAA:
- How North Texas small businesses can apply for an economic injury disaster loan
- Delivery company is hiring 2,000 in North Texas
- Business, health care leaders question whether Collin County’s stay-at-home order goes far enough
- Amid layoffs, furloughs from coronavirus mitigation efforts, about half of Americans are not financially prepared
- Mortgage applications fall less in DFW than in rest of nation