Although PE sponsors have generally transitioned well to having employees work from home, many are continuing to feel financial pain from the harsh fundraising environment, reduced asset valuations and other disruptions caused by the coronavirus pandemic. As those PE sponsors look to enact financial austerity measures, the overhead expenses of their fully or partially unused office spaces are an obvious target. Whether they are looking to obtain rent relief or pursue options to contract the size of their spaces, sponsors need to consider how to broach those conversations with their landlords to have success. To provide insights on the current status of the office-space market and lease-renegotiation efforts, the Private Equity Law Report interviewed Katherine L. Murphy, partner and co‑leader of Goodwin Procter’s real estate transaction services practice. This article contains her thoughts on the latest negotiating dynamics between landlords and tenants; tactics and advice for how fund managers can renegotiate their existing leases to secure rent abatements and office-space reductions; and provisions to include in future lease agreements to preserve leverage in future crises. For additional commentary from Goodwin Procter attorneys, see “Are You Prepared for OCIE’s Sweep of Business Continuity Plans and Coronavirus Actions?
” (Jun. 2, 2020); and “Critical Components of a Fund Manager Cybersecurity Program: Resources, Preparation, Coordination, Response and Mitigation
” (Jan. 15, 2015).