Rent delinquencies among small business owners continue to rise as inflation eats away at their earnings
WaPo Article quotes analyst
“About 37% of small businesses, which between them employ almost half of all Americans working in the private sector, were unable to pay their rent in full in October.”
Rent has been steadily increasing.
Maybe this will bring it back down to rational levels.
True on both counts,
although the way most small businesses are structured
a small change in gross sales makes a such a HUGE difference in profit/loss that, things like wage-inflation and rent-inflation are quite minor by comparison.
No big (D)eal quite yet. First, we’ll need to see the new majority. 
I have friends who have had small businesses in the past. Their stores have lasted five years, because the commercial loans are for five year contracts. Once that five years it up, the rent may explode. A friend of mine had a pretty successful bar that she had to close because of a 500% rent increase. This was in 2015.
Rents going higher and higher have been a lurching problem for a while now.
Inflation has exposed the cracks in the system even more.
There is also the very real problem of high rent blight which has been killing parts of Manhattan and Brooklyn for a good six years now.
Well October’s job data should be interesting.
There are probably a lot of false images (positive stereotypes) about small businesses floating about, but nonetheless
When small businesses are doing so poorly they cannot pay their rent
While rents cannot be excluded from the equation it is just as likely that they have trouble paying their payrolls, their health insurance costs, their utility bills, their advertising bills, paying their taxes etc.,
If gross income goes down or ANY cost category goes up:
small businesses will become delinquent ins all categories and especially delinquent in whichever category has the least repercussions.
True. It’s difficult to stay in business when you cannot forecast what a loan payment will be. I can see a 2% or 3% increase but not anything more than that, especially if operating on a thin margin and still trying to establish a customer base as a relatively new business.
To be honest… all of the small business owners I know are in NYC and that may skew my perspective of things.
I do also know that residential rents have been going out of control for quite a while now.
I have an apartment building up in Maine and when my property manager was recently pushing to raise rents on my tenants I balked at that. My costs haven’t gone up… I refinanced the commercial loan I have on the place before all of the rate hikes…. So since my costs haven’t gone up I can’t in good conscience impose another burden on my tenants for no reason other than greed.
Oh yeah I’ve gone head to head with them (and usually lost)
Mental picture:
Guy who has a nanny for every kid, a personal assistant, and is active in his kids private school lacrosse team, at is summer house he owns a horse he never has time to ride and also owns a string of movie theaters, a marina, a half dozen apartment complexes and a real estate company . . . goes up against a suburban teacher’s son who happens to work for the company that provides free yellow blazers. He got the big contract, I lost because his was “a small business” mine was an big corporation.
More in a bit
Anyway:
Nationwide auto repair shops large or small charge the same $135/hr to fix your car.They pay their mechanic just $18.35/hr. They have LOT of other expenses including rent, tools, advertising, franchise fees, (so they can put a “Firestone” sign outside their business) health insurance, taxes.
If suddenly they get 5% fewer customers, or if their liability insurance increases 30%, they are going to be hurting, and they will delay payment wherever delaying payment is least painful for them, not necessarily in the same area where costs went up.
