How a Landlord of Neighborhood Malls Deals with the Lockdown Crisis his Tenants Face

“Our Retail Marshall Plan”

By Wolf Richter for WOLF STREET:

There are now lockdowns in place in many cities and counties in the US. Since Tuesday, the five most populous counties of the San Francisco Bay Area are in lockdown. Some types of stores are still open as “essential businesses,” including grocery stores, hardware stores, auto parts and repair shops, dry-cleaners, pharmacies, gas stations, and other “essential” stores. Restaurants had to close their dining rooms but can sell meals for take-out and delivery. All other stores had to close.

For the stores that have been closed, that means zero revenues. But many expenses, including rent, are continuing to pile up. It doesn’t take long for this math to doom a business in the already tough retail environment.

And for a landlord, this is not the ideal time to find another tenant to fill another vacancy – or a sudden avalanche of vacancies. Landlords need the cash flow from their properties to pay for interest and other expenses. The priorities of tenants and landlords merge in this crisis. Both are trying to get through it somehow and need each other.

These businesses range from big national chain operations – some of them already in bankruptcy court – to small mom-and-pop retailers and service providers. The brick-and-mortar retailers among them (those that sell goods, not services) were already heavily pressured from two sides, ecommerce and high rents.

And now comes the order to shut down operations for at least a few weeks. For example, the Bay Area lockdown is scheduled to last through “at least” April 7 and can be extended.

Some counties and cities are putting in place measures to help these businesses get through this phase. But what can a mall landlord do to get through this crisis, and get their tenants through this crisis, to where, at the other end of this crisis, business can continue?

John McNellis is a real estate developer in Palo Alto, and a landlord of neighborhood shopping centers and other commercial properties. Here is what he is doing as landlord of neighborhood malls in order to deal with the crisis:

“Our Retail Marshall Plan,” by John McNellis, for The Registry:

Because we’ve been in the neighborhood shopping center business for decades, not only our tenants but also our competitors have begun asking us what, if anything, we’re going to do to help our small businesses in this plague year. As of today, March 17th, all of our tenants in the greater Bay Area (save supermarkets, banks and a few others) have been shut down for several weeks by government order.

Here is what we’re doing:

We are forgiving all rent and other charges (so-called NNN expenses) for the month of April for our mom & pop tenants that have been forced to close, regardless of their business type or when they may reopen. That is to say, even if a tenant reopened on April 3rd, rent for the month would still be forgiven.

We will treat tenants that are mom & pop franchisees of national companies (e.g. Subway) slightly differently. Because our financial resources are a light-year from infinite, we will need the big guys to help us help their franchisees. Thus, we will forgive our franchisee-tenants’ rents up to that same one-month, but only on a dollar-for-dollar basis with credits granted to them by their parent company; i.e. if Subway gives our tenant a $2,000 franchise fee credit, we will give it a $2,000 rent credit.

We will give the same one-month credit to our mom & pop restaurant tenants outside the Bay Area even if they never shut down. But, as to our other small business uses that remain open, we will consider a rent credit on a case-by-case basis. Some tenants are suffering terribly, while others (e.g. cigarettes and alcohol) appear to be thriving.

If a given tenant needs more than one month’s help, we will consider that on an individual basis, likely tying any additional help with a concession from the tenant (e.g. exercising an option, extending the lease term, or perhaps a downstream rent increase).

Many of our national credit tenants are also suffering in this plague year, and we completely sympathize with their plight. They, however, will weather the storm. Also, they are highly sophisticated and understand that our lenders will not be forgiving any of our interest payments and that we are simply unable to offer rent breaks to credit tenants.

We trust and hope that our world will have substantially returned to normalcy by May 1st, even if it takes months to fully recover. By John McNellis, for The Registry

The eeriness of the whole lockdown situation may leave permanent marks on consumers and business-decision makers. Read…  Lockdown in San Francisco, Silicon Valley & the East Bay: We’re to “Shelter in Place.” What it Means Now & Long Term

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  84 comments for “How a Landlord of Neighborhood Malls Deals with the Lockdown Crisis his Tenants Face

  1. Jeff Relf says:

    “The Grapes of Wrath” is about small farms
    going under, unions, and the starving.

    Starvation is no longer a problem,
    we’re obese; today, we need housing.

    Who will solve the housing issue ?

    Who will become the Amazon of housing ?

    This is the real issue, Governor,
    not –relative– poverty ( a.k.a. jealousy ).

    • cesqy says:

      Human nature is working. We’ll all get thru this together but some of my tenant friends and family will be helped more than others.

      • Gordian knot says:

        ITS a commendable and flexible offer but in most cases if this last 2 or 3 months which is the pattern in countries ahead of us on the plague curve it wont be enough. I was in the dry cleaning business sold out a couple years ago. Our monthly gross 165K razor thin margin. With a 50 percent drop in sales which is realistic in this scenario your talking about losing 70k a month. Not survivable for the small guy.

    • JC says:

      On-site 3d printed cementitious houses.

      Factory built kits or complete houses etc …

      The solutions are already here. Greed has stopped them.

      • Cas127 says:


        It is off topic, but tell us more about alt housing construction – links to most useful sites probably best.

        Fed insanity of last 20 yrs has allowed homebuilders to double prices with same monthly MTG, leading to huge destabilization of home mkts.

        Builder costs have not doubled…but their profits have probably quadrupled.

        But very few lower cost providers out there – leaving alt housing construction techniques and self-build as one of few options.

        • FromKS says:

          But very few lower cost providers out there – leaving alt housing construction techniques and self-build as one of few options.

          Denver NIMBYs have banned duplexes and multi-family housing in many areas of the city. It’s regulations, not builder profits that are tying things up.

        • sc7 says:

          I wonder if socaljim would admit to this. That his real-estate wealth creation is at least 50%+ due to fed manipulation over the past three decades and not investor brilliance. If rates were still 8-10 percent, his RoR would be much lower.

          And, with rates at rock bottom, will all the people he’s lecturing to buy multiple properties at today’s nosebleed prices experience the same level of return over the next three decades?

        • motorcycle guy says:

          “builder costs have not doubled but their profits have “”probably “” quadrupled.
          Not true. I became a member of the Bucks/Montgomery County Home builders association which also meant that I was a member of the Pennsylvania Home builders association and the National Home Builders Association.
          Home builders costs have sky rocketed mostly due to local zoning board requirements.
          Zoning permitts and meeting the requirements of the local inspector add many thousands of dollars to the building costs.
          Just one example, a female inspector in Bucks County decided that the dirt needed to be washed off the roads in the building development every night because she didn’t like seeing those dirty roads. It didn’t make any sense and there was no ordinance requiring it but she decided that it had to be done.

      • Deanna Johnston Clark says:

        Those paper thin walled McMansions here in the south are more enraging all the time…many empty for years with homeless everywhere.
        My little post war house in a decent mixed neighborhood went from 47,000 when we bought it to 240,000 now. I have to beat off the realtors and throw away offers all the time…for a little frame house built in 1949.
        Americans have to stop showing off and think realistically about genuine value…in every part of life: housing, cars, affections, dog food, clothes. Get Real, America.
        I’m very faithful to the same small businesses close to home. yesterday I gave a big tip for a carry out lunch and smiled, “I’d rather be nice and broke than cheap and broke.” When we got home the cook had slipped in a crab bisque soup. Be faithful, make friends, be generous.

        • 91B20 1stCav (AUS) says:

          DJC-so true. Our oft-cynical society entered the ‘…knows the price of everything and the value of nothing…’ some time ago. A good time to re-read Pirsig’s ‘Zen and the Art of Motorcycle Maintenance’, perhaps.

          Stay well and let us truly aid each other, friends and fellow citizens. May we all find that better day.

    • 2banana says:

      Chapter 9:

      And—the rifle? Wouldn’t go out naked of a rifle. When shoes and clothes and food, when even hope is gone, we’ll have the rifle. When grampa came—did I tell you?—he had pepper and salt and a rifle. Nothing else.

  2. 2banana says:

    I give it one more week until “speakeasy” restaurants start popping up all over the place.

    In additional to the traditional “speakeasies” of the 1930s.

    And then what?

    Police SWAT raids in the middle of chicken picante because of a local mayor’s “decree” with no backing of law?

    And then – no sales taxes being collected either. And health codes? Forgetaboutit…

    • Wolf Richter says:

      We’re in this together, and if everyone is cooperating and working together, we’ll get through it faster and at a smaller human and material cost. That’s the attitude of most people I know.

      • Jc says:

        I agree. Follow the CDC guidelines, you end up not just helping yourself but everyone else at the same time. It doesn’t get better than that.

      • Deanna Johnston Clark says:

        Absolutely….well said, Wolf!!

    • al capone says:

      I think a lot better if neighborhoods have secret block party’s, the problem with speak-easys is they were really a cover for gambling, and prostitution, both of which are really anti-social in these times

      We’ll seem IMHO your social-networking in the bayahrea probably is already sponsoring little wine&cocaine events all over the place, you know were entering a ‘enjoy life, for tomorrow I’ll die’ event for young people.

      I’m sure Wolf will remind all that none of this is good for the community. But kids are invincible and never die as you all know.

  3. Iamafan says:

    Open your palm to Uncle Fed. They bought almost $75 billion for QE4ever today. Tomorrow same, same.

    Schedule for Thursday, March 19, 2020 and Friday, March 20, 2020 (all times ET)

    9:40 – 10:00 am: Treasury Coupons 7 to 20 year sector, for around $6 billion
    10:30 – 10:50 am: Treasury Coupons 4.5 to 7 year sector, for around $11 billion
    11:20 – 11:40 am: Treasury Coupons 2.25 to 4.5 year sector, for around $17 billion
    12:10 – 12:30 pm: Treasury Coupons 0 to 2.25 year sector, for around $25 billion
    1:00 – 1:20 pm: Treasury Coupons 20 to 30 year sector, for around $9 billion
    1:50 – 2:10 pm: TIPS 1 to 7.5 year sector (Thursday)/TIPS 7.5 to 30 year sector (Friday), for around $7 billion

    If you need a mortgage, don’t worry. Look what’s coming. More than 1 Trillion.

    11:15 – 11:45 AM: For settlement on March 23, 2020 (T+2).
    UMBS 30-year 2.5 securities for around $2.2 billion
    UMBS 30-year 3.0 securities for around $2.3 billion
    UMBS 30-year 3.5 securities for around $500 million

    12:15 – 12:45 PM: For settlement on March 23, 2020 (T+2).
    UMBS 30-year 2.5 securities for around $2.2 billion
    UMBS 30-year 3.0 securities for around $2.3 billion
    UMBS 30-year 3.5 securities for around $500 million

    • cesqy says:

      The disease is the cure. Where are my COVID19 antibodies when I need them?

    • sc7 says:

      Where are you getting to more than $1 trillion? That adds up to $10 billion, unless I’m missing something?

      • Iamafan says:

        QE4 is already more than $232 billion.

        13-Mar-20 37.004
        16-Mar-20 40.004
        17-Mar-20 40.006
        18-Mar-20 40.006
        19-Mar-20 74.998

        Total (so far) $232.018 billion

        This does not include repo (temporary) which is about $ 392 for the week.

        On March 23, the Fed will buy MBS, look at the announcement above for numbers.

    • Wes says:

      Iamafan. Don’t forget the Federal Reserve’s Discount Window. They are now lending to businesses. Section 13 of the Federal Reserve Act.

    • Yield curve control or trying to step in front of the collateral unwind that has been the marginal bid on UST for so long?

      We know the former “works” (but not for helping markets decline, kudos to the BOJ) and we’ll see if the latter will do more than just another asset swap with the big boys that fails to put more credit into the system (cause they are hoarding it).

  4. Iamafan says:

    Re: Malls. Any idea how much CMBS is being bought by the Fed?

    I assume this is CMBS, right? Anything else like commercial paper?

    • Social Nationalist says:

      They don’t buy that. Post smarter.

      • Iamafan says:

        They opened ABS borrowing, so how can you say they don’t buy that.

      • Iamafan says:

        Just to be clearer. What we can expect. In 2008, TALF covered:

        The underlying credit exposures of eligible ABS initially must be auto loans, student loans, credit card loans, or small business loans guaranteed by the U.S. Small Business Administration. The set of permissible underlying credit exposures of eligible ABS may be expanded later to include commercial mortgage-backed securities, non-Agency residential mortgage-backed securities, or other asset classes. The underlying credit exposures must not include exposures that are themselves cash or synthetic ABS.

        So while Q.E. is limited to Government Security, if and when the Fed repeats TALF, it’s all systems go.

        • cesqy says:

          1. When things get tough, the banksters have to lie.
          2. When the going gets really, really tough, the banksters change the rules.

  5. Anmol says:

    Iamafan – have to say the credit markets calmed down today. Looks like they threw everything on the fire and managed to control it somewhat.

  6. Seneca's cliff says:

    Most commercial tenants will be in such bad shape after a couple of months of this that they will certainly not be able to pay any deferred rent ( which is why it is smart that John is forgiving it) but can he sustain it for more than a month? It is also questionable that many will even be able to pay regular rent for a month or two when things get back online. Will their suppliers be ready to go?, will their employees have moved back to mom and dads basement in Topeka? will they have the cash or credit to buy inventory or pay employees. It is going to be tough restart.

  7. Jdog says:

    I hate to say it, but rewarding failure never seems to have a positive result.
    As a culture, we are becoming more and more dependent. Self reliance is a thing of the past, and I cannot help but believe this is going end badly.

    • Social Nationalist says:

      Self reliance?????? Never was what you thought. As people grew in wealth, the ponzi scheme’s collapse made going back into the dirt worse off and created anger. It also built a spirit of tribalism which destroys everything you hold dear.

  8. Social Nationalist says:

    As Max Stirner noticed long ago, property rights are just controls by the state. Natural and self reliant………nope. If you can’t hold it, you can’t keep it. People who work together and organize the best suucceed. The bourgeois state and it’s facade of ‘rights’ are just collectivism.

    • Unamused says:

      People who work together and organize the best succeed.

      Hey, we resemble that remark.

      • Social Nationalist says:

        No you dont. Your a ponzi

        • Unamused says:

          We’re an autonomous collective and as a marxist corporation we own our means of production, except for the toilet paper, which we donated to help the less fortunate because they didn’t have anything to barter.

  9. Bobby Dents says:

    Easy, lift all quarantines May 1st. There is your Marshall plan.

    • RobVC says:

      Won’t happen.
      We will see a sharp rise of infections and Covid-19 related death. Nevermind almost all deaths are 70+ (Netherlands) or 80+ (Italy) with an average of #2.3 underlying medical conditions.

      Fortunately in Europe authorities and corporations start recognizing the vulnarability of the elderly and measures are being adapted to this (new) reality eg special opening hours in supermarkets for the elderly.

  10. Brant Lee says:

    See, it’s government-backed corporations who will survive. How could small businesses pay back loans while renting expensive mall spaces, whenever they could open again?

    Most likely the auction business will be flourishing. Bring cash and your truck and trailer. Bottom feeders delight.

  11. Paulo says:

    Very nice landlord in the sense he is trying to help out and get through as a team. I wish him luck, and his tenants as this moves forward. I wonder what the Kushner property managers are doing? As well as his in-laws? (Did this sneak past the trip wire).

    When the Great Depression hit, my Minnesota grandpa had a rural fuel business. He kept his customers (friends and neighbours) in stove oil until his tanks ran dry. Some paid, most couldn’t. After he went under he obtained work in a slaughterhouse in the Twin Cities working on the pig sticking line.

    • Morty Mc Mort says:

      I bet Minnesota Grandpa was a little Dis-Gruntled by the whole affair…

    • Stephen C. says:

      My Grandfather was a grocer and extended credit to his neighbors until he went bust. He sat in a chair the rest of his life, reading the Bible.

      Not sure if I could do that.

      Kudos to the writer of this article. At least he’s communicating. Give that man a social credit merit star! My apartment landlords (who have always been anonymous) have so far been silent, and I don’t expect to hear anything unless I don’t pay up.

      • poor little rich guy says:

        My family owned a chain of drug-stores in Chicago during the great-depression, they went bust, and moved to LA, and bought most of the beach north of Santa-Monica.

        My grand-ma used to tell fond story’s of riding her horse all day along the beach north of santa-monica, and never seeing a soul.

        My mom’s family married into a family that had lost it all also back east, they moved to the west coast and bought most of what was called the Newport “Back Bay”, it was a swamp.

        When ever I hear about these story’s of ‘losing it all’. So they lost $5M in Chicago, but came to LA with $250k, back then you could buy anything for that kind of money. They had lost it all.

        Sort of like when Musk drops from a $10 Billion guy to a $500M guy, he’ll say he ‘Lost it All’, but to most of us mortals, we still think that $500M is real money.

        Of course I had friends who lived through the GreatDep who were just working people, and they told me the story’s of mothers on their block starving so they could feed the kids, and newborns dying for lack of food. Mostly folks from Minnesota, Duluth

        The thing is when it gets bad, most rich people are mobile, they sell out, get out early and start over some place better, the poor, or working-class seem to rot in place. Same now we all saw this coming, but most just held their ground, now you can’t leave even if you wanted to, as the entire world has shut their borders.

  12. Cas127 says:

    Back on topic – the one-for-one match is wise.

    Implicit reciprocity in America died a long time ago, once the gvt rewarded/turned a blind eye to those who gamed the system.

    They cultivated a culture of corruption.

  13. gorbachev says:

    For small owners of rental property I think many

    will trade of bit work for rental forgiveness if you are

    renting to young folk. If not hopefully you have dry powder

    and can absorb losses for a while.

  14. hidflect says:

    There should be a nationally mandated cut of rents by 20%. Why should the rentier economy not shoulder some burden and continue to make money at unsustainable, 2019 levels?

    • 2banana says:

      Why not 30% comrade? Why not 50%?

      Will property taxes be cut by 20%? Upkeep? Mandatory fire and health codes? ADA compliance?

      Oh, you think all landlords are rich evil guys…

      • Zantetsu says:

        No one is saying they are evil rich guys 2banana. But why should they make 100% of their normal take when the people renting from them have lost their jobs? Spread the suffering around a little.

    • Bridgetown Beast says:

      I agree; Rampant rent seeking combined with a sharp contracting of earned income is a sure recipe for disaster. Unfortunately with the securitization of residential rent and the complete lack of any politicians rational to affect such a policy the idea is D.O.A.

      We find ourselves in a situation where the only way for wealthy elites to continue to get their 7 percent returns is to squeeze ever harder to extract rents from the few portions of society that produce value. The wealthy keep forgetting that 1) the proles have to eat once in a while, and 2) the Hamptons are not a defensible position.

      • Frederick says:

        Sure they are We could always mine the Shinnecock canal DONE Hampton Bays west of the canal is already occupied territory anyway

    • cb says:

      If things deteriorate, rents will not be paid, and will fall. People who don’t earn can’t pay. It cost money and time to evict, and then the chase for a new tenant begins. Rents will work down naturally, because the loandlord will have little choice.

    • Zantetsu says:

      I am still getting paid my normal salary. I don’t need to have my rent cut. I am not opposed to having rent cuts for those who lost their jobs or revenue streams, but I wouldn’t make them unconditionally available to everyone.

      • Canadian says:

        >I am still getting paid my normal salary

        For now.

        If this continues much longer, it will be VERY deflationary. Your salary will be dramatically slashed — perhaps to zero.

        • Zantetsu says:

          At which point I would be in the “those who lost their jobs or revenue streams” which I already said. So what’s your point?

  15. Bennett says:

    I am a landlord of national retail and local mom and pop shops. About ¾ of our retail tenants have been regulated to close, even up to two months in some places. Most of our tenants have reached out for relief but we have not granted it. Mortgage payments are still due, property taxes are still due, all utilities and other expenses are still due. Government put a hard stop on many retail businesses, but it hasn’t stopped the engine from continuing down the track.

    The Federal and Local governments have created extreme market inefficiency with their policies. The reality is rent is owed, and tenants need to show the impact the government has caused them so businesses can be compensated accordingly, either through federal aid or insurance. Granted, we are not going to be placing our tenants into default over incomplete payments or charge late fees, but tenants need to know that they have a responsibility to explore all avenues to capture their loss revenue. We will either extend the lease term or spread missed payments throughout the lease term. In our experience, when you give free handouts the favor is not reciprocated or appreciated on the other end. Waive rent, and its likely the tenants will not care to compensate you with their aid when and if received. Maybe this is the wrong approach, but we decided its best not to make panicked and rushed decisions when the market is extremely volatile and laws are being discusses and passed by the hour that affect us all.

    • Zantetsu says:

      You should be giving discounts. Not free rent, but you should not be making your normal returns when those renting from you have lost income.

      If the renters who lost revenue can get some of it back, then they should share a percentage of that back to you.

      • Zantetsu says:

        By the way I would only advocate giving discounts to tenants who can prove that they have lost jobs or revenue.

        • Frederick says:

          How do you “prove” lost income if someone works for cash and pockets the money? This whole thing Reeks of moral hazard just like forgiving student debt I didn’t bust my behind paying for mu sons 4 years at Georgetown so that some deadbeat could get a free ride No Bernie Sanders for this old goat thank you

        • Zantetsu says:

          Fredrick, have you ever heard the phrase “don’t let the perfect be the enemy of the good”? If your argument against any proposal is that it cannot be implemented perfectly, then no proposal is ever viable.

    • Beans says:

      I am a mom and pop leasee who has had to deal with an arrogant, entitled and incompetent national REIT for the past 5 years. They sound alot like your post. You have NO IDEA the stress and fear you have dealt your tenants with this type of policy. I have been shut down for 2-3 weeks or longer. My time is spent calling clients, working to make sure my employees have a way to make money to make ends meet and trying to keep the whole mess from imploding beyond what can be salvaged. It is no suprise to hear that landlords like you think that offering a month of rent relief is some kind of gravy train that lazy people like me would only take for granted. You couldn’t be further from the truth.

      • Beans says:

        Just to clarify- my post is in reply to Bennett. I could only be so lucky to hear Mr. McNellis as my landlord.

    • Canadian says:

      That’s okay. Enjoy bankruptcy.

  16. wkevinw says:

    The concept of “being nice” or “working as a team” give us comfort/are part of human nature, but so is self-interest and preservation.

    If it is more efficient to forgive some rent, etc., the landlord should do it. Often it is easier to do that than foreclose (find new renters, etc.)

    The whole idea about sending checks from Uncle Sam is but another danger. If employees or employers need money, a local banker would/should have the best information to make that transaction. Nowadays because of the way financialization has gone, the detailed knowledge of local business people is lacking.

    That’s not good for anybody (except the oligarchs and federal government elites).

    When the central government sends aid it’s to consolidate their power- they’re not just “being nicer” than those who would think twice about that type of system.

    • Paulo says:


      The central govt is sending checks to keep the pitchforks in the barn and their heads on their shoulders.

      I’m not sure if the dog eat dog world you describe is worth saving.

      I’ve got a tenant and if his pension disappears and he can’t pay I wouldn’t even think of evicting him. Wouldn’t happen. In fact, my wife and I discussed this very topic at lunch. How does anyone make a 79 year old man homeless and then look in the mirror and have a shave the next day? Do unto others, it could be you, tomorrow.

      • Zantetsu says:

        Good for you Paulo. Very admirable.

      • wkevinw says:

        They don’t have to “look in the mirror”/”be nice” about it. You are assuming that the 79 year old man would immediately be homeless, etc. Most likely, it is to the landlord’s self interest/benefit NOT to evict.

        The whole idea that in the past droves of people were evicted, died in the streets, etc., because of previous economic and social systems is false.

        The economic and social systems have to create enough wealth to afford various events, such as pandemics.

        Be careful about wishing for some omniscient, omnipotent central authority.

        If you micro-manage everything from some high level central economic control you get: The Great Chinese Famine.

        The central government nicely controlled many millions of people into starvation.

  17. Iamafan says:

    FYI Wolf and others, there is an excellent article at bberg basically proving us right.

  18. Zantetsu says:

    Already shut down for several weeks already? I thought the shutdowns just started less than a week ago.

  19. Michael Engel says:

    1) The malls shut their doors. Their empty parking lots are eerie.
    2) Costco parking lot is full of fancy cars loading emergency supply
    from a cart.
    3) Costco make a lot of money from social spacing. Costco warehouse
    is your house.
    4) The Wuhan 19 is a cause for a change of shopping, but for Costco
    customers its all the same. The rich exhibit a larger pulse.
    5) They buy red meat for weeks, chemical warfare for the house, a large quantities of toilet papers up to the ceiling, bags of rice, pasta, frozen veggies and pizza, chocolate ice cream, cakes and wine to compensate for social distancing.
    6) A min of 300 sq. ft. out of 3,000 sq.ft. in a $3M house is Costco warehouse.
    7) Costco cost center must be used fast, or painful losses will be applied.
    8) M2 velocity is slowing, but Costco wine consumption is rising.
    9) Costco customers are repeated customers, because mingling
    of the rich is contagious.
    10) Costco shopping have an expensive medical cost that should be added to Costco saving

    • Edward Bellamy says:

      Long term COST is just like Gold right?

      My problem is that the JIT stuff hasn’t really seen the full effect from the loss of arriving container ships.

      It doesn’t matter how much disposable cash these people have, eventually they’re stocks are gong to be depleted.

      Lot’s of the comfort food&wine, isn’t exactly ‘essential’ or is it there in Calif?

      What about all the MJ growing OP’s in CALIF were they ruled ‘essential’?

      I don’t own any COSTCO I guess for me its like owning PM, or any tobacco company, its a sin, and eventually the model will fail.

      Which gets back to the OP here, the existence of this COSTCO is because it KILLED the ma&pa stores where people used to shop. More than likely because of lack of employment, people will start selling ‘essentials’ out of their homes on the block, once again. The future is NOT Costco, its ma&pa.

    • Frederick says:

      Wonder how Trader Joe’s wine sales are faring? They have a great selection at great prices By the way just because somebody is leasing a fancy car doesn’t make them rich Not by a long shot My father who was a dentist drove a used VW beetle and our house cleaners husband used to pick her up from work in a new Cadillac It’s all about priorities

  20. Island Teal says:

    Wolf….Good Article and well stated,Great plan and the right way
    to handle the emergency needs,
    As of today I have not received one email from any of my creditors advising what they are doing to help their customers. Maybe because they are Banks and/or Mortgage companies and we know who they take care of.

  21. Sbarro says:

    And please don’t forget that we must protect our village blacksmith shops. American life revolves around these shops, and besides, where would people go for horseshoes if we let the village blacksmith shops disappear from America.

    Hey, if the monstrosity once known as “malls” are worth saving from their deserved economic fate, then why not village blacksmith’s? Lets have a huge program and spend billions of dollars that we don’t have in order to make sure that all across America we still have village blacksmiths.

    Why are malls worth saving? If we are going back in time and saving an era, I’d much rather have town Main Streets lined with shops rather than a dang mall. Can we as a people exercise even a little common sense and not save one of the worst ideas mankind ever invented, and one that is closely linked to individuals in personal automobiles in sprawling cities which were more awful ideas almost as bad as The Mall.

    • Lisa_Hooker says:

      Ma and Pa didn’t contribute enough to political action committees in the past. It’s too late now.

  22. Done Yesterday says:

    I was a landlord, sold out all my rental property’s in 2012.

    Sold all my farmlands prior to 2016

    Now I’m done

    The reason I sold my rental property’s is the gov drove me nutz, I took good care of the propertys, but the system is rigged against the landlord, and most places the tenants get free lawyers, and the landlord can’t even have counsel in a hearing. So I quit,

    The problem is most people didn’t buy houses and apartments back when they were cheap and run-down, say in the 1980’s. Most people just drank wine, and spent their cash ate out, and took vacations in Hawaii, quicker than they could make it, and max’d their HELOC.

    For those of us who worked weekends, and actually enjoyed turning an old house into a thigk of beauty that was our reward, or to fix up a run down apartment building and make it a really nice place.

    Sure the appreciation was 10X, and we’re told “never sell” hold forever, but often things aren’t fun anymore in a rigged game.

    Now of course there are more tenants than ever, but often they live like ten to a house, and trash the place, and turn the house into a grow-room, and then the insurance company deny’s a claim. It’s all rigged against the landlord.

    So you all can keep renting, but this landlord quit a long time ago.

    Sounds like the OP here is more about larger commercial tenants, I like renting to long-term small biz, they usually were ok, and surely didn’t play tenant-law games.

    Most landlords would never give ‘free rent’, just like most employers never pay people “not to work”, I know this doesn’t make sense, but to businessmen, there must be income to pay the bills.

    We all know the USA is insane, the FED prints infinite free fiat, and now the GOV expects property-owners to extend free money to tenants & employees. This attitude trickles down because money has no value. Except it does when you don’t got it.

    I suspect CALIF is going to wake up one day, with no money of value, and nothing to buy.

    • Lisa_Hooker says:

      I have also noted that money is no longer worth much. The usual suspects no longer want to borrow mine as there is so much of it sloshing around everywhere they don’t need me. When they need some their friends lower rates and print more.

    • wkevinw says:

      Done Yesterday-Yep. I have had family who bought and ran rental properties. To the person, they advise not to do it. It wasn’t worth it.

      75% of people in the US are not self employed- and this number has continued to rise. As such, the ranks of people who think “I go to work and they pay me” is the way “profit is made” continues to grow. Note the growth in the elitism of the academics and government bureaucrats: no profit here, just a cushy desk job. Everybody knows they’re the elite, so they deserve it!

      I have also had bad landlords. However, I do not under estimate the hard work it takes to own and rent property, run a business, etc.

  23. MF says:

    We use a cooperative corporate structure that provides lot rent stability and protection from displacement for people who live in mobile home parks. A large number of Member households are losing their jobs as we speak. We held a national video conference today to figure out next steps. It’s not going to be easy but it will definitely involve everyone working together in many of the same ways Mr. McNellis described. The goal is to keep everyone in their homes until the gig/retail economy can somehow restart.

    Many of our clients are one or two paychecks from financial catastrophe. This is not news. But what you may not know is that mobile home parks are in short supply these days. In most cities, “respectable” people pressure their regulators to get them shut down.

    This crisis is a double-whammy for families below median income levels.

  24. No Expert says:

    “keep the rent – the land lords dead” – graffiti Paris May 68′

  25. TownNorth says:

    Mr. McNellis: interesting article and your kindness to your tenants will be repaid somehow, I think through loyalty long-term. Thanks for sharing your strategy here.

    I suspect that with tenants not paying rent, and with all the uncertainty in this environment (risk up, cap rates up), the assessed valuation of your properties can be appealed downward, lowering taxes. I don’t think Prop 13 is upward only. Perhaps lower valuations also mean lower insurance costs, dropping your tenants’ triple nets on several fronts.

    And permanent lenders may be open to renegotiation / restructuring, especially in a non-recourse state.

  26. Jan van Eck says:

    Last year I published an abstract of a new product that I am developing, a permanent coating material that can be applied to any hard metal or plastic surface which kills viral and bacterial matter. The idea was directed specifically at hospitals in an effort to passively prevent colonisation of hospital-acquired infectious matter being passed to vulnerable patients; it would also decrease risks for staff and visitors. The problem in hospital settings is that invariably the visitors will bring in fresh infectious matter, will touch anything and everything, and then that matter will contaminate surfaces that patients (and staff) touch in turn.

    I would report that the coating material has been tested with COVID-19 and kills it passively, and rapidly. You would put the coating, which is a permanent material, onto things like door plates and handles, telephone handsets, ATM keys, bathroom fixtures, you get the idea. In the context of the greater society, the coating would be applied to commerecial kitchens, store doors, checkout counters, anything the public is likely to touch. The coating thus shuts down colonisation and reduces transmissability.

    You would think that, in the context of this latest global infection, this product would gain attention. Instead, the total interest has been precisely zero, and I am ridiculed as the village idiot. Oh, well.

  27. Gary Sandritter says:

    Thanks, Wolf and John,

    I own and manage small industrial properties in the Denver Metro area. Your thoughtful approach to this helps me work through our situation.

  28. Rcohn says:

    The collapse of the mall and commercial REIT space is just a template for the collapse of real estate in the most expensive markets.
    Small houses in Palo Alto selling for millions is absurd.

    • char says:

      Mall real estate is collapsing because the demand is gone. The same is not true of houses

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