Those owners of just one or two properties with few units are likely suffering the most, says Linda Morris, president of Cambridge Management Group, Inc. in Escondido near San Diego. Morris owns a duplex in San Diego and manages apartments for other landlords.

“Owners of smaller properties have very low margins, and some are having to contribute their own money to pay the mortgages because rents are reduced while operating costs for things like insurance, water, utilities, and trash keep going up,” Morris says.

Owners of larger apartment complexes likely have the cushion of better margins, she says, but then again, many of those properties were bought right before home values plummeted and now their owners are saddled with underwater mortgages.

Garland says ENG Properties has been able to escape that dilemma because it purchased its properties years before the housing crisis. In fact, its properties are now valued higher than before because of all the upgrades the company made last year. ENG Properties says it will likely reap an even better return when it eventually sells those properties.

Phillips, of Pacific Coast Commercial, owns several units within a commercial strip mall in San Diego and manages commercial properties for other property owners. Some of his business tenants asked for discounted rents over the past year, but after reviewing their financial statements, Phillips declined. “I think they were just probing to see what they could get, but they are all doing okay,” he says.

Phillips has heavily discounted rents for tenants of properties he manages for other owners and, in some cases, has given four months of free rent. In each case, the landlords approved the discounts.

In some areas of San Diego, such as El Cajon, rent on industrial space fell from $1.10 to 65 cents per square foot in the span of one year, and many tenants have been looking for a way out of their leases. In cases where tenants are nearing the end of their multiyear agreements, Phillips has been offering lower rental rates as an inducement to renew.

A veteran of several downturns over the past 30-odd years, Phillips says that he believes that property owners have really “matured,” and that most have quickly responded to the current crisis.

“It’s really a partnership between the owners and tenants,” he says. “If the owners are honest with themselves and the tenants are honest with themselves, then they can work together and they can both make it through the cycle.”