Health Emergencies And Pandemics ' Are You Prepared For The Future (Podcast)

• Published date: 24 October 2022
• Subject Matter: Real Estate and Construction, Landlord & Tenant - Leases
• Law Firm: WeirFoulds LLP
• Author: Mr Karsten Lee

selfWeirTalking Leasing | WeirFoulds LLP · S2E6. Health Emergencies And Pandemics - Are You Prepared For The Future

Karsten Lee and Alexandra DiCenzo explore ways in which landlords and tenants can both be proactive with respect to pandemics and safeguarding their business interests in the next few months and into the future. Aside from the adjustments that many businesses have made during COVID-19, they dig deep into recommended clauses that can be introduced to leasing agreements and also touch on business interruption insurance with the additional rider that may help tenants obtain coverage during a pandemic. This episode was recorded in September 2020.

Transcript

Narrator: You're listening to season two of WeirTalking Leasing, a podcast series from WeirFoulds LLP's Commercial Leasing Lawyers in Ontario, Canada. In part two of the season, our lawyers and guest speakers discuss key topics through the lens of the COVID-19 pandemic, such as navigating the real estate market, landlord and tenant issues, and how to prepare for future crises. Let's get to it.

Karsten Lee: Welcome back, everyone. As some of you might know, I'm Karsten Lee, and I'm a partner in the Commercial Leasing Group here at WeirFoulds, and joining me today is Alexandra DiCenzo. Alexandra DiCenzo, an associate in the Commercial Leasing Group with Karsten.

Alexandra DiCenzo: It's nice to be here on a podcast.

Karsten Lee: Yeah, and it's great to have you join us in delivering this podcast to all of our listeners. Today's topic will be what everyone has at the forefront of everyone's minds and everyone's lives which is emergency and pandemic planning. And in today's podcast, we'll be speaking on how emergency and pandemic planning relates to commercial leasing.

Alexandra DiCenzo: Yeah. We've had Lisa Borsook talk about the current state of the real estate market and Krista Chaytor talk about the issues arising from post-COVID recovery. We're continuing
that series of hot topics today. As an introduction, Karsten, emergency and pandemic planning in the context of commercial leasing doesn't just relate specifically to the drafting of leases. Am I right? We're going to discuss other ways landlords and tenants can be proactive with respect to future pandemics, such as preparing exit and reentry plans, new office designs and materials, new work environments and operations,
improve technology, and so on.

Alexandra DiCenzo: But is there anything else that comes to mind when you think of pandemic and emergency planning in the context of commercial leasing?

Karsten Lee: Obviously there's a lot going on, and the first thing in everyone's mind in the leasing industry, especially leasing lawyers, is the commercial lease. But aside from the commercial lease, there obviously is a lot of other things going on. You did mention a few of those things, which we'll touch on a little bit later on in this podcast, such as preparing an exit and reentry plans and so on and so forth. But at the end of the day, for all parties entering into any lease or who are in the middle of a lease, what each party will need to think about is each business' needs.

Karsten Lee: For example, from a tenant's point of view, tenants will want to make sure that they have flexibility to allow their business to adapt in the event of an emergency, right? And we've seen a lot of examples of tenants adapting their business because of the pandemic.

Alexandra DiCenzo: Well, I say it's been interesting to see. I live in the downtown core, so it's been interesting to see sidewalk bars pop up for bars that can't operate inside anymore, pop up grocery stores. My hair salon even developed their own PPE and created eucalyptus hand sanitizers. I'm seeing all these tenants get onboard of the pandemic planning for sure.

Karsten Lee: Well, absolutely. Those are definitely the types of tenants that we see at the forefront every day while we're walking down or driving down the street, like restaurants who have adapted so that they can do more of their business from a take out basis, and then regular retailers being able to adapt to offer their customers curbside pickup. But also what we don't see just from looking at a store or an office from the outside is that what's actually going on in the inside, and they've obviously had to make changes to their premises. We've all seen the plexiglass.

Karsten Lee: But also in terms of offices, a lot of tenants have been shifting around the office space, shifting around desks so that they can have proper physical distancing within the office. There's new directions, for example, that all employees need to walk within an office, so the minimizing of contact between people while people are walking from their office to another end of the office, that sort of thing. And there's obviously a lot going on that we don't see, safety measures that have been put in place both by the tenants as employers and landlords as obviously the owners of the building.

Karsten Lee: And also, there's a lot of different communications going on between landlords and tenants and employers and employees and what not. Again, everyone's got to think about what their business' needs are. We spoke a little bit about the tenant's point of view and how they need to have flexibility to allow their businesses to adapt. But also from the landlord's point of view, they've also had to take on a lot of different things that they've never had to do, such as pandemic planning, thinking about measures that they need to do, thinking about insurance concerns, for example, and security measures that they need to put in place.

Karsten Lee: The landlords also need some flexibility in what they can do during a pandemic. For example, again, in an office building, landlords have had to adapt. They've had to make sure that they're physical distancing in elevators and in the common areas. And at the end of the day, parties need to be proactive. We're staring the second wave straight in the face right now. We're at least coming from a position where we're a little bit more ready than we were let's say 12 months ago, but we still need to be proactive just in case there are other curve balls that are ahead. And we will need to be able to continue to adjust quickly.

Karsten Lee: Like we said, the lease is still important. It's what governs the relationship between the landlord and the tenant. It's what gives each parties the rights that they enjoy. But on top of the lease, there are other aspects that need to be thought about.

Alexandra DiCenzo: I don't think anyone realized how difficult and complicated day-to-day operations get when restrictions are imposed. It's definitely something to plan for. Do you think landlords and tenants were prepared for the current pandemic? I know after the SARS outbreak, parties were more mindful of pandemic and health emergencies provisions. I don't believe they were commonplace, and COVID brought new government mandated regulations and closures that landlords and tenants have never experienced before, at least from my knowledge.

Karsten Lee: Well, were we prepared? I think if you were to kind of rewind and put yourself in our shoes more than six months ago, let's say 12 months ago, were we prepared? Probably not. Was anyone expecting this? No. But at the end of the day, I think from an operational point of view, everyone was able to adapt relatively quickly, both landlords and tenants, right? It was impossible to prepare for something like this. You did mention SARS, but that was completely different. 17 years ago when SARS came about, it really didn't have the same effect as COVID. Offices weren't shut down. Malls weren't shut down. Governments didn't shut non-essential businesses down.

Karsten Lee: That was a completely different animal. A lot of people who had the foresight of thinking through issues...