City of Winnipeg considers waiving rent to keep some tenants in spaces hit hard by pandemic

Brad Park's restaurant in downtown Winnipeg's underground concourse has survived almost two years of the COVID-19 pandemic — but just barely.

"When I purchased the business, it was OK. I mean, lunchtime was really busy — people walking around. It was packed. People lined up," he said, standing in the empty dining area of Seol Nami Sushi.

"Now, it's quiet down here."

Park is among a group of tenants in city-owned facilities who could get a boost through a City of Winnipeg proposal to waive their rent for a six-month period, from February to July of this year.

Eight businesses are listed in the proposal from the city's public service, including six in the underground concourse. Another is in the downtown skywalk system on Graham Avenue, and one is in the Cindy Klassen Recreation Complex on Sargent Avenue.

A report to the city's property, heritage and development committee says those city facilities had to close at the start of the pandemic.

The underground concourse and the skywalk system partially reopened in June 2020, and reopened fully with regular hours last fall.

Even so, the report says some tenants weren't able to reopen due to a lack of foot traffic.

"I try to stay open. I still stay here, but I don't see the future," said Park. "I can't really see it going back where it was before." 

Some businesses have reopened, but are seeing "revenues at a fraction of previous levels and are not showing signs of recovery," Marc Pittet, the city's manager of real estate and land development, writes in the public service's report.

"Requiring tenants to pay full market rent at a time when revenues are down could lead to small business bankruptcies and long-term vacancy issues within the city's inner-city retail portfolio."

Challenge to find tenants: report

The idea behind the proposal is to keep the tenants the city already has and prevent more downtown space from becoming vacant. 

The city has had challenges in the past getting tenants into the underground concourse and the skywalk areas, the report says.

"Once a city unit is occupied, it is important to retain tenants, supporting short and long-term viability,"  writes Pittet.

Waiving the rent for six months would cost the city $72,377. Should the proposal be accepted, the businesses would receive retroactive payment or rental credit, according to the report. 

"I think it's very affordable considering what the city would have to do if we had to find a new tenant for that space," said Coun. Cindy Gilroy (Daniel McIntyre), who is the chair of the property and development committee.

Attracting new tenants takes time and money, she said.

"This is a way we can help support the needs of these business owners, but also help deal with the impacts that it could cause by potentially losing these business owners."

The proposal was a collaborative project between city staff and the businesses listed in the report, Gilroy said.

"I think that city staff are aware of this — seeing the struggles themselves as they go through these buildings, and they're seeing we have some that are sitting empty and some that are just really struggling with the impact," she said.

Park said he knows the city and downtown businesses are actively trying to bring employees back to the area, but he worries that won't happen fast enough to keep his business open.

He's also asked the city to cut the term of his lease from 275 to 30 days.

"This tenant is actively marketing their business for sale and have requested this reduction to limit their future rental obligations should they not be able to sell," the city's report says.

The reduced lease agreement would also allow the city to actively market the unit, it says.

"I see other small restaurants outside, and they're doing OK with takeout and stuff, but here it's just not many people walking around, so I can't really do any takeout," said Park.

"I stayed long enough, but it's really hard."

Councillors on the property, heritage and development committee will debate the idea on Monday.