It’s been two weeks since North Carolina shut down restaurant dining rooms. As a result, most establishments are either closed entirely or doing a fraction of their normal sales by pushing take-out and delivery. With their small margins disappearing, restaurant owners have been forced to furlough staff and are asking regulars to support them by purchasing gift cards. Now, as March comes to a close, owners are faced with another question: How can we pay our rent?

Many restaurant owners we’ve spoken to say they won’t be able to afford more than this month’s rent payment, leaving landlords across the city wrestling with the decision to give rent relief to their tenants or be forced to seek new ones when this is all over.

John Lambert, a commercial real estate broker with Moseley Real Estate Advisors, is also a landlord. His tenants include Sweet Lew’s BBQ and Bloom & Bottle, a flower and bottle shop, in the Belmont neighborhood. His leasing work, he says, has outright stopped. Now, he’s working with his tenants to see what relief looks like as they remain closed.

Lambert doubts many restaurants will have landowners forgive rent entirely, but believes agreements to defer rent will be common. Smaller landowners who have closer relationships with their tenants may reduce rent down to what the landowner pays each month.

“It’s not even a difficult question as the landlord about if you’re going to give rent relief,” Lambert says. “I mean, you’re not finding a tenant in this environment and it doesn’t behoove you to try and pressure or squeeze any of the tenants, because nobody caused this one. So we’ve just kind of got to dig in with a teamwork mentality to get us out of this.”

The question of how much relief to give is a difficult one, but many landlords are trying to find an answer that balances their best interests with their tenants’. Camp North End, for example, has been aggressive in curating its food and beverage tenants to create a dining destination. Leah & Louise, a new concept from Greg and Subrina Collier, was meant to open on the campus off Statesville Avenue the same week restaurants were shut down. They’ve had to open with take-out instead. In April, several food stalls were meant to open, including ones from the owners of Wentworth & Fenn and Bleu Barn Bistro. Opening is an especially difficult time for businesses, as they’re trying to recoup the skyrocketing costs of opening a restaurant. Varian Shrum, the community engagement director at Camp North End, says her team wants the concepts they’ve been working with to be successful once this passes.

“The last thing we want is for any of our tenants to go out of business during this unprecedented time of uncertainty,” she says. “We believe Camp North End is better off in the long run by helping existing tenants succeed, rather than trying to replace them in the future; but more importantly, we love our tenants like family.”

According to Shrum, the owners of the food stalls — which will now open after the pandemic passes — will not be asked to pay rent until opening. Food stalls are growing in popularity as a way for owners to ease their way into brick-and-mortar spaces. Food hall Optimist Hall is still rolling out new concepts, and has created a drive-through to provide curb-side delivery to diners from the kitchens that are willing to produce food. We reached out to White Point Partners about what their plans were for tenants, though they normally decline to discuss leases or specific tenants.

“Suffice it to say, we believe we are all part of the same ecosystem that is being affected quite negatively by coronavirus and all that it entails,” says Jay Levell, partner at White Point Partners. “We are all suffering the consequences that come with trying to contain the pandemic, and as such we firmly believe the right thing to do is to work with all of our partners – Optimist Hall tenants included – to make certain we navigate through this time successfully, together.”

Levell says they’ll be addressing the situation with each business individually to help determine the best way forward.

“These are relationships we value, and without them, none of us would be able to accomplish the great things we are collectively capable of doing at Optimist Hall,” he adds.

Lambert says he has about six months before he and his business partner would have to invest more capital into the properties they own, and that cushion will allow him to be more flexible with his tenants.

The possibility of closures could bring big changes to the trend of skyrocketing rent due to demand and over-saturation of the restaurant market. Going forward, Lambert believes this economic upheaval might help small landowners return to the table in commercial real estate.

“I think a lot of the leases were over-leveraged; their debt ratios were a little out of whack, they were getting a little too greedy,” he says. “So it might clean out some of the bigger names and landlords, and that might make room for some more nimble, creative, smaller groups focusing on more core acquisition staff and on the tenants.” —Kristen Wile