Rent Stress Growing says Alignable Survey

Alignable, the largest online referral network for small businesses with over 6.5 million members across North America has just released their September Rent Report and after a brief improvement in the national rent crisis numbers over the summer, the Delta variant has pushed small business rent problems to the forefront again. On average, 35% of U.S. small business owners can’t pay their rent in full or on time this month, up 5% from August.

Canadian small businesses are having similar troubles with 38% reporting they could not afford their rent, up from 32% last month. These findings are based on a poll of 2,880 small business owners conducted by Alignable from August 28 2021, to September 29 2021.

Rent problems are worse for some industries and the survey shows that most businesses that rely on in-person contact, including salons, gyms, and retail demonstrated more trouble paying rent in September, as Delta rages, new masking requirements return, and fears of contracting COVID escalate among many consumers. Restaurants leading the way (again) in having the hardest time paying rent. For the first time in six months, most restaurants (51%) were unable to cover their September rent.  In July, 40% of restaurant owners couldn’t afford their rent, then it lifted to 45% in August, and finally, this month, it’s up another 6% to 51%.  Massage therapists, where the number of respondents who couldn’t pay their rent, more than doubled from August, catapulting from 22% to 48% citing the Delta variant as the key driver in keeping patients away.

What’s happening in key States & Provinces?

Looking at the statistics by state and province, there’s some good news for New York where only 37% of small businesses couldn’t pay their September rent. While the New York state is still over the national average, it’s 4% below the 41% of SMBs that didn’t cover rent in August or July.

Michigan is the worst state for rent stress with 43% of small businesses missing their rent payment. In addition to Michigan, several other states have witnessed the negative effects of the Delta variant on small business owners’ ability to pay the rent in full and on time.

The States showing the most rent stress are:

  • MI: 43% couldn’t pay their rent (up 15% from August)
  • TX: 39% (up 7%)
  • NJ: 38% (up 14%)
  • GA: 38% (up 6%)
  • CA: 37% (up 5%)
  • FL: 33% (up 4%)
  • VA: 32% (up 1%)
  • CO: 29% (up 3%)

Similar struggles in Canada

38% of Canadian SMBs couldn’t pay their rent, compared to 35% in the U.S. The three provinces showing the greatest stress are: 

  • BC: 50% couldn’t pay their rent (nearly doubling from 26% in August)
  • AB: 34% (up 5%)
  • ON: 34% (down 3%).

Possible solutions revealed by business owners

No doubt, rent issues have exacerbated for many small business owners. However, to highlight another angle of the rent discussion, Alingnable added a few questions to the September rent poll to provide landlords with suggestions on how to improve the rent payment crisis. In particular, Alignable asked: “What’s the most important step a landlord can take to help in the COVID Recovery Process?”

Nearly half of the respondents with landlords, 48%, said offering some sort of rent assistance would be the most welcome gesture, nearly a third of the respondents, 28%, said they would like their landlords to renegotiate their leases, and finally, 12% wanted their landlords to establish better safety protocols for their tenants, and another 12% want their landlords would ramp up promotions encouraging more foot traffic to their stores and restaurants.

Other findings from this survey indicated that about 20% of landlords are already trying to help their tenants with rent fixes and other measures to foster their recovery.

Read the full Alignable report here