Economy Has Some Businesses Facing Eviction Notice

I don't think there's a statistic for the amount of commercial evictions occurring locally, but I would bet the Sarasota/Manatee market is similar to that of Miami/Dade's. It's a tough time to start a business, and just as tough to keep the lights on when your customers are cutting back on spending. Unfortunately, I think we're going to see more of the same. It's certainly as trying of a time for landlords as it is for tenants. A lot of people I talk to are very tentative about expansion and many landlords are equally worried that even good credit tenants may leave. The domino effect this has is pronounced. The good part is there are landlords out there who will attempt to work with their tenants in this market (see story below).

From Daily Business Review, by Polyana da Costa

When the owners of Tiger Allie, a Boca Raton children’s clothing store, signed a retail lease in 1997, they likely never imagined the financial and legal woes they’d face.

More than 10 years later, they are at least five months behind on their rent, a sign advertising a liquidation sale is on the door and a lawsuit seeking the store’s eviction is pending.

When Tamarac Fortune Partnership, which owns a three-story office building on University Drive in Tamarac, leased an entire floor to a group of businesses in the medical field in late 2006, the landlord had no inkling the tenants would default on the five-year lease. In July, however, the partnership sued to evict the businesses, which it says defaulted on lease payments beginning in April.

And at Boca Raton’s tony Mizner Park, at least two stores, an art gallery and an antique shop, have fallen behind in payments, according to eviction lawsuits filed against those stores.

As the economy flirts with recession, these and hundreds of other small South Florida businesses — including medical offices, art galleries and clothing stores — are struggling to keep pace with their rents. Increasingly, they’re failing. That means a sharp uptick in evictions, a boost in work for real estate lawyers and greater strains on the legal system.

The volume of all evictions filed in Miami-Dade, Broward and Palm Beach counties is up an average of 10 percent compared to last year, according to the clerk’s offices in each jurisdiction.

For example, June was a record month for lawsuits seeking evictions in Palm Beach County — 1,076 were filed compared with 877 in the same month last year. (The figures include residential evictions since the clerk’s office does not track separate actions against commercial tenants.)

Most store owners facing eviction lawsuits don’t want to comment. Representatives of Tiger Allie, the Boca Raton clothing store facing eviction, did not return a phone call.

The suits seeking evictions represent only a small number of commercial tenants who’ve fallen behind on their rents. Many landlords are choosing to work out deals with struggling tenants, said John Scott, director of client solutions at Cushman & Wakefield.

Scott said the company, which manages about 10 million square feet of office, warehouse and retail space, has not seen a mass of evictions at its properties. It has helped its landlords work with tenants who are financially strapped. The options have included lowering tenants’ rents for a period of time and rolling over the shortfall to the end of the lease, he said.

“Landlords aren’t just looking to eliminate their tenants,” he said. “The market is not as strong as it was a couple years ago. It’s hard to replace a tenant in this market. Our brokers have been working harder than ever.”

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