Small businesses face new threat: ballooning rents
Former investment banker Carol Roth and Americans for Tax Reform President Grover Norquist grade President Biden's handling of the economy on «The Evening Edit.»
Small business owners have been devastated over the past three years by high prices and a crisis-level worker shortage.
Now they're facing a new hurdle: rising rents.
New findings published by the Bank of America Institute show that many small business owners are still contending with high inflation, particularly in the form of rent.
In fact, there is evidence that small business rent inflation exceeds that of U.S. households. The average monthly share of rent in total payments through May is 9.1% for small businesses – a sharp increase from the 2019 average of 5.9%. By comparison, rent for individual Americans rose 5.3% in May.
US HOME PRICES SMASHED ANOTHER RECORD HIGH IN APRIL
The increase is being felt most acutely in the West, in cities like Las Vegas, where the average share of rent in May was more than double the national average, according to BofA.
A help wanted sign is posted in the storefront window of Kay Cameron Jewelers in Sayville, New York, on Sept. 21, 2021. (Steve Pfost/Newsday RM via Getty Images)
«Rent payments per client closely track the nonresidential real estate rents component of the producer price index, suggesting that these increases are largely due to inflation rather than small businesses upgrading to bigger or better spaces,» the report said.
The sharp increase in rent has a growing number of small businesses falling behind on payments, according to a separate study published by business networking platform Alignable. About 43% of small business renters in the U.S. were unable to pay their rent in full and on time in April.
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