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Rent Latest Cost Bedeviling Small Businesses | News, Sports, Jobs

Martin Garcia, owner of the gift and decor store Grammarcy Gift Gallery, poses for a photo at his store in San Antonio on Wednesday, June 29, 2022. In the first two years of the epidemic, landlords waived rent, but now many are demanding a refund. Meanwhile, most government assistance programs helped small businesses overcome the epidemic. (AP Photo / Eric Gay)

NEW YORK (AP) – Rents have arrived for small businesses in America and at very unnecessary times.

In the first two years of the epidemic, landlords were reluctant to pay rent. Now, many are asking for rent again, while others are raising the current rent as well. Meanwhile, most government assistance programs that helped small businesses go through the epidemic have come to an end when inflation has sharply increased supply, shipping and labor costs.

Martin Garcia, owner of the Gift and Deco store Grammarcy Gift Gallery in San Antonio, Texas, survived the first part of the epidemic by paying his landlord as much rent as he could each month.

Then in August 2021, after the end of the federal moratorium on evictions, her landlord demanded the full amount of rent she owed back.

“I need $ 10,000 in 15 days,” Garcia said. He took out a loan – often at a high interest rate – and just met the deadline.

A strong holiday season helped him repay his loan, but sales have dropped so far this year, and he used credit card financing to pay his June rent. Garcia feels that some of his customers are cutting down on unnecessary things in order to pay higher prices for petrol and other must-have items.

Thirty-three percent of all U.S. small businesses failed to pay their May rent in full and on time, up from 28% in April, according to a survey by Alignable, a small business referral network. And 52% said rents have risen in the last six months.

“A lot of small businesses are still frankly recovering from what Covid was up to,” said Chuck Casto, head of corporate communications at Alignable. “Plus, they’re dealing with the one-year price of rising inflation at that peak. It’s really hard for small businesses to do that. “

Ris Lacoste is the owner of a well-known restaurant called Ris in Washington, DC, and is using the funds received from the restaurant’s relief fund to pay his rent. But the money must be spent by March 2023.

“All I have to do to survive after that is to go into reserve every penny I can save,” Lacoste said. To cut corners he is refining tables to reduce linen costs, not printing color copies of menus and working with 22 staff instead of 50.

Before the epidemic, the 7,000-square-foot restaurant was often full, but it “doesn’t return to full possession,” Reese said. At the same time, inflation is increasing the cost of doing business.

“Pay-rolls are rising, labor is rising, commodity prices are rising, utilities are rising,” Lacoste said. “I wear 20 hats instead of 10 and work six days a week, 12 hours a day.”

But rent is not something he can control and it increases the pressure.

“You’re working for the landlord, how long do you want to do it, how long will you live?” He said. “It’s not sustainable.”

Data from commercial real estate financing and advisory firm Marcus & Milichap shows that rents rose 4.6% in the first quarter of 2022 compared to the same quarter a year ago because vacancies fell to 6.5%, the lowest since 2015. But Daniel Tubb, national director of retail at Marcus & Milichap, says inflation will make it harder for homeowners to impose rent increases because consumers will start to feel pressured.

“Consumers can only spend so much when the dollar doesn’t go that far, and retailers can only pay so much to carry space and have enough inventory to pay employees,” he said. “It’s a tough retail market and something to pay for.”

Charlene Ferguson owns the technology business building she owns in Wylie, Texas, with her husband, Just Call the IT Guy. He also has 13 tenants, so he hesitates from the perspective of both small business and landlord.

During the epidemic, Ferguson agreed with his tenants to suspend rent from a massage therapist to the church. Once things started to open up again, he worked with the tenants in the back yard. They were all caught in three months – except for the church, whose debt he forgave.

But he had to raise rents by about 5% until May to cover his own costs for building maintenance. In addition to utility and cleaning supplies, property tax prices have risen. So far, he has not lost any tenants.

“I’ve done enough to cover the increase, I haven’t done anything else,” he said. “We’re not making too much money, but we’re keeping people in business.”

For some small businesses, a higher rent is not the only option. Solution: Go remote.

Alec Pao, CEO of, a credit management consultancy with 8 employees in New York, said his landlord planned to increase rents by 30% when renewing his contract. Pow expected a small increase. The landlord says they have a potential tenant who can take the lease for the full requested price.

So, Pao decided to lose the office and let his New York staff work remotely for two months when they would find a cheap place. The business has one office in San Francisco and two in Europe.

“We were in the process of raising the wages of our workers to cope with the rise in inflation,” he said. “We didn’t have room for these two expenses in our annual budget, so we had to choose one.”

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