Yubalance Neighborhood Fitness Club lost the majority of its gym members within a few days after the shelter-in-place order took effect in March, costing it 80 percent of revenues across its three studios. Only 150 members remain, down from 600 before the pandemic.
“I have literally spun around the ocean with no compass and I have no idea what direction we’re going,” said Rory Cox, co-owner of Yubalance.
While the business paid rent for its studios in the Sunset and Richmond districts until May, it has since ceased payments. Whether the landlords have forgiven or deferred the unpaid rents remains unknown, Cox said. Neither does he know whether he must begin paying full rent when The City’s commercial eviction moratorium expires on Sept. 30.
Yubalance’s story is a dime a dozen right now in San Francisco, where the coronavirus pandemic has left business owners struggling to stay afloat. Many fear the looming expiration date of the moratorium may trigger an “avalanche” of evictions for commercial tenants, according to Allan Low, a real estate attorney who is working pro bono to help small businesses in The City’s Asian cultural districts.
“Unless we rely on the generosity of landlords, there’s a real threat there’s going to be just a wave of litigation [from] landlords trying to collect rent,” Low said. “The practical question there is: You sue and evict tenants, but who’s going to come in and take over the space?”
“There’s just not enough money in the real estate ecosystem to make anything work right now,” he continued. “Most tenants’ sales are down 70 to 80 percent and [they] just don’t have enough money to pay rent. If landlords aren’t collecting rent, they can’t pay their mortgage.”
The landlord of Yubalance’s studio in Noe Valley has forgone rent during the pandemic, Cox said, and is discussing the structure of rent payments after The City’s commercial rent moratorium is set to expire.
Yubalance is beginning to recoup some of its financial losses, as city officials have allowed fitness studios to begin indoor operations on Monday, but the future of its studios is still hanging in the balance.
“We’re excited to be open,” Cox said. “But there’s an incredible amount of uncertainty because we don’t know what the landlords are going to say. Come the first of October, we aren’t going to be able to pay full rent.”
While Mayor London Breed has extended The City’s commercial eviction moratorium to Sept. 30 from Sept. 14, she said that The City’s ability to extend the moratorium beyond the end of the month depends on the state. An executive order from Gov. Gavin Newsom that allows local governments to suspend commercial evictions is set to expire at the end of the month.
The Board of Supervisors is expected to unanimously adopt a resolution on Sept. 22 to urge the governor to extend eviction protections for small businesses.
“We know that people are anxious, especially those that have just had the opportunity to reopen,” Breed said at a news conference on Tuesday. “They want certainty about the future. We want to give you that certainty, and we want to give you that flexibility. We are doing everything we can with the governor’s office to make sure that we’re able to extend that [moratorium].”
In Japantown, tenants in the Kinokuniya Building at Japan Center mall sent a request for rent relief to landlord Kinokuniya Bookstores of America in April, according to Anne Matsuno, a co-owner of the cafe Kissako Tea since July 2019. While some tenants accepted an offer from the landlord to defer rent payment in May, others like Matsuno and her husband, who is the co-owner of the business, declined, because paying a month of deferred rent later would be too burdensome for the business.
“The community has been very supportive of our business and we’ve just been doing the best we can to support each other — our fellow tenants and the community — [and] getting the word out that there are people here and that we’re still open,” Matsuno said.
Meanwhile, Low and Diane Matsuda, a staff attorney with the nonprofit organization Asian Pacific Islander Legal Outreach, are representing 44 tenants at the Japan Center mall including some in the Kinokuniya Building in negotiations for rent relief with landlords Kinokuniya Bookstores of America and 3D Investments, which own separate parts of the mall (Kissako Tea is not involved). Low said the two landlords have not offered rent relief options since June, although 3D Investments expressed interest on Wednesday in exploring options.
“It’s really important for the governor to extend that moratorium,” said state Sen. Scott Wiener, D-San Francisco, who introduced legislation earlier this year seeking to temporarily prohibit eviction of commercial tenants. The legislation, which was opposed by commercial property owners, died in committee during a short and chaotic legislative session.
“So many small businesses and nonprofits are teetering on the edge,” Wiener said. “We need to get businesses and nonprofits up and moving.”
Some businesses have been able to negotiate feasible agreements with their landlords. Before the pandemic, Ben Angel, owner of New Harmony Cafe, had signed a lease with the landlord for temporarily reduced rent so the business, which started in January, could get on its feet. When the shelter-in-place order came into effect, the business was severely impacted and the landlord agreed to extend the reduced rent until after The City allows for indoor dining to resume.
Now, the Mission District cafe is relying on revenues from the Great Plates Delivered SF program, a program delivering free meals to older adults during the pandemic.
“That has saved our business,” Angel said. “[It] provided a huge foundation of stability for us to pay bills [and] navigate our way through this crisis.”