National rent problems are escalating for more small businesses across the U.S., both in terms of rent spikes and delinquency rates, as revenues decrease compared to last year.
Rent Spikes Increase For More SMBs As 2023 Proceeds
- Reached a record-breaking level, rising for the fifth consecutive month.
- 55% of SMB owners report higher rent vs. six months ago, up a percentage point since May & eight percentage points since January, when it was 47%.
- 16% say their rent is over 20% higher, up two percentage points since May.
Rent Delinquency Jumps Again
- Almost four out of 10 SMBs were unable to pay June rent in full.
- U.S. rent delinquency stands at 39%, tying with April as the highest this year, up two percentage points from May & nine percentage points since January when it was just 30%.
- Making matters worse, revenues are down for many SMBs as 53% earn half or less of what they generated this time last year. In May, that number was 51%.
- Minority-owned small businesses face even more daunting problems: 58% can’t pay June rent, the highest rate all year. And 40% only have one month or less of cash reserves.
Education, Manufacturing, & Restaurants Suffer Most
- Educators face the highest rate of rent delinquency at 55%. Manufacturers and restaurant owners follow closely with rates of 46% & 45%, respectively.
- But there is some good news for a few categories: travel/lodging, retail, and automotive sectors have improved delinquency rates in June.
Mixed Results Across States
- NJ, FL, GA, OH, & IL report the highest June rent delinquency rates. Leading the group, 48% of NJ-based SMBs can’t pay June rent, up 18 percentage points from May.
- WA, CO, & MI stand out with the lowest rates, indicating signs of economic improvement.
Canada’s Situation Mostly Improves
- Canada’s rent delinquency rate among SMBs is also 39% in June, down 14 percentage points from May, when it was 53%.
- Key provinces Alberta and British Columbia see reduced delinquency rates, down to 40% and 37%, respectively, in June. Ontario’s rate jumped two percentage points to 40% in June.
