In recent days, Alignable’s July Small Business Rent Report reveals that, for the second consecutive month, 55% of SMBs are grappling with rent spikes, producing two distinct outcomes:
- 52% of small, independent landlords have rebounded, thriving as they charge what they need to succeed. This is a key insight, as many of these landlords are small business owners themselves, who struggled greatly over the past three years. 2023 is their year, so far.
- For the fifth month in a row, nearly 40% of SMBs in other industries can’t afford to pay this month’s rent, due to ongoing spikes & trouble ramping up revenue. This month, 40% of small business owners say they’re only earning half or less of the monthly revenue they generated prior to COVID.
These findings are based on 4,601 responses from randomly selected SMB owners polled from 7/2/23 to 7/27/23, and historical input from another 80,000 SMB owners. Other highlights include:
Rent Spikes & Delinquency
- Among the 55% coping with rent spikes, 15% now have to pay over 20% more in rent costs compared to what was required six months ago.
- And 13% of landlords who haven’t raised rents yet, say they’ll need to do it soon to combat the effects of cumulative inflation.
Landlord Recovery
- So far in 2023, each quarter, more landlords have been able to thrive, achieving recovery. In January, 44% said they recovered. In April, that figure jumped to 48%.
- And finally, in July, as noted above, 52% of independent landlords experienced a true rebound, despite three years of putting some tenant payments on hold and/or discounting their rents to help renters cope with COVID and inflation.
Ups & Downs For Key Sectors
- Manufacturers experienced a record-low delinquency rate of 12%, indicating potential stability in the sector.
- Restaurants, retail, and transportation also saw a decrease in rent delinquency rates, with restaurants declining the most — from a rate of 45% in June to just 36% in July.
- However, musicians/artists, scientists/technology workers, & gym owners top the list of the highest delinquency rates – 40% to 49%.
States Struggling With Rent Spikes
- Texas had the highest percentage (73%) of small business owners facing rent spikes, aligning with its position as the second-highest state for rent delinquency at 47%. (Maryland was No. 1 with a delinquency rate of 55%).
- Other states with SMBs struggling with escalating rent costs & growing rent delinquencies include: Colorado, Washington, Michigan, California, Arizona, & Massachusetts.
- Meanwhile, SMBs in Illinois, New York, Pennsylvania, North Carolina, and Virginia, have experienced much lower delinquency rates compared to June.
Canada’s Rent Landscape
- Canada’s national rent delinquency rate matched the U.S. at 37% in July, showing a slight improvement from June’s rate of 39%.
- Alberta had the highest delinquency rate in Canada at 43%, while British Columbia recorded the lowest at 29%.
To see the full report, including several, in-depth charts, go here.
