> In September, rent delinquency was at a six-month low, as optimism for Q4's earning potential was high and some small business owners reported increased sales.
> But now, a month later, 37% of small business owners in the U.S. were unable to pay their rent in full and on time in October, compared to just 30% in September.
So 30% was a six-month low, and 7% more is a record surge. This implies that a surprisingly large percentage of small business owners are always behind on rent.
Another thing to remember is that the landlord gets paid last - if you miss a wage payment to your staff the local government will crawl right up your arse and explode, if you miss a tax payment the IRS will do something similar (though a bit later). If you start stiffing your suppliers you'll have nothing to sell, and if you fall behind on utilities you'll get them cut off.
But if you stiff the landlord he's not going to evict you right away, especially if you make a partial payment (note the "in full") and he has nobody better to rent to, anyway.
> But if you stiff the landlord he's not going to evict you right away, especially if you make a partial payment (note the "in full") and he has nobody better to rent to, anyway.
I'm not shedding tears for landlords. Most of them charge exorbitant rent while still enjoying absurdly low interest rates of the last decade on their loans and doing the bare minimum (or none at all) of maintenance or investment into improvements (e.g. bring electricity and water grids or insulation up to code).
I seriously hope that the current market crash brings down rents massively to affordable prices, but as long as landlords can get tax advantages for un-rented units especially large corporations don't have an incentive to lower rents - it will take a lot of no or partial payments to force their hands. An alternative would be vacancy taxes, but these are hard to pass if half the legislators are bought off by large real estate investors and their banks.
Commercial landlords are often renting triple net to big companies, and smaller businesses sublease from the larger ones (those stores you see inside Walmart are an example, but the stores stuck on the outside of larger stores are often that way, too).
It's part of the reason every valuable downtown is now coffee shops, banks, and lawyer's offices, nothing else can pay the rent (best use? probably from a money perspective, not from any other).
> It's part of the reason every valuable downtown is now coffee shops, banks, and lawyer's offices, nothing else can pay the rent (best use? probably from a money perspective, not from any other).
The problem is now that there are no actual shops left because they can rent, community centers end up dead in a vicious cycle as when large traffic attractors leave, the smaller shops that would catch random passersby don't have passersby any more.
To make it worse, city governments usually don't have any way (e.g. via zoning) to regulate what precise kind of commercial activity is allowed in a property - the result is what you describe.
> But now, a month later, 37% of small business owners in the U.S. were unable to pay their rent in full and on time in October, compared to just 30% in September.
So 30% was a six-month low, and 7% more is a record surge. This implies that a surprisingly large percentage of small business owners are always behind on rent.
Another thing to remember is that the landlord gets paid last - if you miss a wage payment to your staff the local government will crawl right up your arse and explode, if you miss a tax payment the IRS will do something similar (though a bit later). If you start stiffing your suppliers you'll have nothing to sell, and if you fall behind on utilities you'll get them cut off.
But if you stiff the landlord he's not going to evict you right away, especially if you make a partial payment (note the "in full") and he has nobody better to rent to, anyway.