His company, which has invested in neighborhood shopping centers in Southern California for 32 years, has given rent concession of 10% to 15% to troubled tenants recently, including Kermani, he said.
"I'm sorry to see it go this way, normally -- 99% of the time -- we save it, we work together," Pashaie said.
Small tenants can take steps to improve their odds of winning rent concessions, including opening their books and offering something in return, experts said.
Tenants of all sizes are seeking rent relief in record numbers, industry veterans say. Requests picked up around January with rent adjustments in the range of 15% to 25%, depending on the sub-market, said Padilla, who works primarily in Santa Monica and Los Angeles.
The trend is expected to continue as the commercial real estate market struggles.
The retail vacancy rate for Los Angeles County hit 5.3%, a 10-year high, in the first three months of the year compared with the year-earlier quarter, according to Marcus & Millichap of Encino. The real estate brokerage projects that rate to grow to 6.8% by the end of the year, compared with 4.5% in 2008 and 2.8% in 2007. This year's rate could hit 12% in the Inland Empire and 7.2% in Orange County, the report said.
Many small-business owners feel anxious about asking for a rent cut but think they have no choice.
"I don't know how long we will be in the downturn," said Renee Kim, owner of a Cookies by Design franchise in Long Beach. The landlord of her small neighborhood center gave her a 30% cut in her rent for the first half of the year.
"I felt like it gave me a lot of momentum," Kim said.
For a mom-and-pop business, the best way to approach a landlord is through a letter explaining the situation in clear economic terms, said attorney Dan Villalpando, a retail development and commercial leasing partner at Cox, Castle & Nicholson in Los Angeles.
"That might go over better with a landlord than getting 30 letters from Starbucks for 30 centers they are working with asking for rent relief on all of them," Villalpando said.
Be prepared to share financial information for the last three years. Include projections through the next year or two. Show how a rent concession would help your business survive. Have a plan for how you will improve sales so the landlord doesn't worry you will come back in six months with another concession request.
