Rent Problems Escalate For Small Business Owners – 40% Can’t Pay
Alignable’s August Rent Report is out today and, unfortunately, rent problems among small businesses (SMBs) have just broken a new record for 2022. Some 40% of small business owners could not pay their August rent on time and in full, up 6% from July. (Prior to this, the highest rent delinquency rate in 2022 was 35%).
Beyond that, the 40% rent delinquency rate is the highest in nearly 18 months, reflecting the all of the forces hindering the recovery of many small businesses.
Also, in that survey, only 23% say they’ve fully recovered to their pre-COVID revenue levels (down 2% from July). This is the worst monthly recovery rate we’ve tracked in the past year.
- 45% say they’re paying at least 50% more in rent than they did prior to COVID; 24% have landlords doubling their rent, and 12% say they’re paying three times more.
- Rent issues are even worse for minority-owned firms, as 53% of their owners say they couldn’t afford August rent, up 4% from July.
- Most industries saw an increase in rent delinquency rates, with agriculture (50%), nonprofits (46%), restaurants (46%), automotive (44%), education (44%) and travel/lodging (44%) topping the list for August.
- 40% of SMBs in real estate are in the same situation, doubling their delinquency rate since April, when it was 20%.
- Regarding the states, 55% of small businesses in Colorado, 53% in Illinois, 52% in Georgia, 44% in California, 44% in New York and 40% in Texas couldn’t pay their August rent in full and on time. These are the states suffering the most with SMB rent problems.
- On the opposite end of the spectrum, Massachusetts & Pennsylvania were the only states seeing an improvement in rent issues from July to August.
- For Canadians, the situation is even more severe than it is in the U.S. with 48% unable to pay August rent, up 11% from 37% in July.
- In terms of provinces, Ontario is the highest with 51% unable to afford rent, up 15% from July, when the rent delinquency rate was just 36%.
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