Small Business Rent Report Reveals Good & Bad News

February 15, 2023 – Alignable’s January Small Business Rent Report reveals both good and bad news regarding rent delinquencies among entrepreneurs.

The good news is that the overall national average of rent delinquencies is 10 percentage points, down from December’s figure of 40%, leaving us with a rate of 30%, which was last seen in August 2022.

The bad news is that 56% of minority business owners say they could not afford to pay January rent in full and on time, up six percentage points from December. In fact, the last time their rent struggles were as pronounced was May 2022.

This report is based on a monthly poll of 5,732 randomly selected small business owners surveyed from 12/31/22 to 1/30/23, as well as historical responses from another 100,000 SMBs over the past 18 months. The chart below illustrates the current situation.

Minority-owned businesses have had a rough time. 56% of minority business owners say they could not afford to pay January rent in full and on time, up 600bps from December. This is a level not seen since May 2022. Below is a chart showing various business ownership types against the average. Again, the percent quoted are SMB’s that replied that they could not pay January rent in full and on time:

This next chart shows SMB’s by type, regarding their inability to pay full rent on time. Although restaurants and gyms were slightly better off when compared to January 2022, Beauty Salons and Retail replied that conditions were worse:

The biggest winners here were:

• Travel/Lodging with the lowest rent delinquency rate in over a year at just 12%, down 10% from Dec.
• Automotive at a rent delinquency rate of just 16%, less than half of what it was in Dec.
• Construction at just 30%, down from 43% in Dec.
• Education at just 32%, the lowest since Apr. 2022.
• Gyms at 23%, the lowest since Feb. 2022.
• Manufacturing at 22%, down from 33% in Dec.

Restaurants also stabilized from a high of 52% unable to pay rent in Dec. to just 38% now, 14 percentage points down. However, that means nearly four out of 10 independent restaurant owners were unable to pay rent, which is still daunting.

They also broke it down by state. Although many reported better conditions month-over-month, almost all states showed year-over-year deterioration, with the exception of Arizona, Colorado, and Ohio:

States showing rent delinquency improvement:

• AZ — 14%, down from 30% in Dec.
• CO & OH – both are at only 22%, down from 33% in Dec.
• PA — 28%, down from 42%
• TX — 29%, down from 45%
• NJ — 31%, down from 42%
• CA — 31%, down from 39%
• MA — 31%, down from 37%
• NY — 35%, with a major shift of 20 percentage points from Dec., when the rate was 55%. (Let’s see if this is a blip, or if it lasts.)
• FL — Also, at a rent delinquency rate of 35%, Florida’s SMBs are down from 41%.

Read full article here.