thread Re: In the News: Has your business rent risen dramatically? in Community Corner

In the News: Has your business rent risen dramatically?

PessoAlumni — Wed, 24 Jul 2024 14:16:17 GMT

Hey Newsies,

Today we’re looking at an article from AP News reporting on the rising costs of commercial rent for small businesses. I’d love to hear your thoughts and experiences on this!

AP News: Rent Inflation Remains a Pressure Point for Small Businesses

The article explains that inflation is affecting rent for small businesses, which has been putting brick and mortar business owners in a very difficult position. It pulls data from the Bank of America Institute showing that rents have been increasing in higher percentages than before, at a disproportionate rate to other increasing expenses.

Rising rates of an integral fixed expense like rent is a very difficult thing to overcome, with a lot of business owners feeling stuck and not having a choice in the matter. Moving to a new location can potentially mean the end of a business, and the alternatives aren’t ideal. Owners need to deal with these higher costs by simply making less profit, raising prices, cutting other expenses such as employee labor, or considering moving or closing up shop entirely. Either way, it puts immense pressure and stress on owners just trying to make it through.

In my shop, we had our share of rent increases. This tended to happen around the times that we were renewing our store’s lease. We locked in the terms of increases into our lease so we knew the increase schedule and there were no last minute surprises. Luckily we were given some notice so we were able to plan ahead to raise our prices and try to cut expenses. However, towards the end, the landlord gave us shorter and shorter leases, which became a challenge and left room for more increases.

What’s your perspective:

Have you been feeling bigger rent increases in the last few years?
What have you done to offset some of those higher costs?

Can’t wait to hear your thoughts!
Pesso

This article is for informational purposes and does not constitute legal advice. For guidance or advice specific to your business, you should consult with a qualified legal professional.

Re: In the News: Has your business rent risen dramatically?

Rizwanlang — Wed, 24 Jul 2024 16:13:30 GMT

Yes, it has risen significantly.

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Wed, 24 Jul 2024 17:05:53 GMT

Thanks for sharing, @Rizwanlang !

What kind of percentage has it gone up by now, and what were your usual increases like?

How are you handling the increases and making sure you can afford it?

Re: In the News: Has your business rent risen dramatically?

LightningLous — Fri, 26 Jul 2024 04:26:30 GMT

Unfortunately rent is so high in our area we have to stay mobile and can't even find a shop to rent that doesn't cost $9000-14000 a month for rent of a small to medium shop. to lease land to park our equipment cost $2000+ a month.

Re: In the News: Has your business rent risen dramatically?

Lovewell — Fri, 26 Jul 2024 05:31:18 GMT

We feel really happy with our Flagship location rent (it increases very little yearly) but we definitely noticed the jump with our newest second location. It really does make things tight but we continue to press on with the thought of "If we don't do this and fill this spot who will?"

Re: In the News: Has your business rent risen dramatically?

rtfulk — Fri, 26 Jul 2024 22:42:28 GMT

We are mobile, but we have seen a few of our fairs increase the rent, some as much as 2,000.00 increase from the previous year.

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Mon, 29 Jul 2024 15:05:57 GMT

Wow, that's a massive increase, @rtfulk ! Is that per event/month/year?
What was the usual level of increase before this?

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Mon, 29 Jul 2024 15:07:31 GMT

That's so great that there aren't massive increases in your main location, @Lovewell !

Dang, what have the jumps been like at the second location?

That's a good point -- it could be someone else with deeper pockets who could afford it, or someone else who can't sustain it and ends up closing, or it could just sit empty. Who knows!

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Mon, 29 Jul 2024 15:09:23 GMT

Thanks for sharing, @LightningLous -- Wow that's a really steep entry point to open a shop! What area are you in?

Sounds like staying mobile is a good financial decision from the rent standpoint. How has business been just being mobile?

Re: In the News: Has your business rent risen dramatically?

Lovewell — Mon, 29 Jul 2024 20:22:47 GMT

It is about $1000 more! Which is wild because it's a smaller place. But we truly felt like we were supposed to give back to our community and be a bright spot in our little town so we went for it! Jesus take the wheel.

Re: In the News: Has your business rent risen dramatically?

maxpete — Mon, 29 Jul 2024 21:13:50 GMT

Dang a $1k increase is a lot! I have no doubt that you all will make it work, but disappointing to see commercial landlords do this!

Re: In the News: Has your business rent risen dramatically?

rtfulk — Mon, 29 Jul 2024 21:38:29 GMT

That’s per event 10 days. Our rent for 10 days at state fairs start around 9,500.00. One of our 10 day Christmas shows is 21,500.00

Re: In the News: Has your business rent risen dramatically?

DinaLRosenberg — Tue, 30 Jul 2024 00:16:46 GMT

I wouldn't say dramatically but when it was time for us to renegotiate our lease it did go up a bit and there wasn't much we could do about it.

Our space is actually a store and two apartments combined to make one big shop in an entire building... because the cost of rent is so high here, we know that our landlord could rent the 3 spaces for significantly more than what we are paying for the whole building.

In addition we now need to pay for garbage, sewage and water ... when prior they were included in the price.

There was little we could do- the comps weren't there... so we just roll with it.

Re: In the News: Has your business rent risen dramatically?

WST90 — Tue, 30 Jul 2024 21:55:34 GMT

We are witnessing an increase in rent prices and minimum wages. While our situation remains manageable, we've observed several nearby businesses experiencing dramatic rent hikes, leading them to either shut down or relocate.

Re: In the News: Has your business rent risen dramatically?

MudFire_Dex — Wed, 31 Jul 2024 00:44:31 GMT

We had a standard 3% a year escalation until last year when I negotiated no escalation for 4 years if I expended capital to replace the roof of the building we rent. It had been costing several thousand a year in small repairs, skylight replacements etc and with a NNN lease it was my $ to upkeep. We've been trying to find a second location for a while and recently made the jump to doing some renovations on the building we are currently in to suit a new classroom space. Our newest prospective landlord came in $14K a month for 6000 square feet which is a steal in Atlanta but over a 9 year lease built enough escalation to bump that to $32K a month with prospective property taxes in year 9. The escalation schedule was INSANE. So after 1.5 months of negotiations - we declined.

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Wed, 31 Jul 2024 22:17:09 GMT

Wow, that 20-25% raise is a pretty significant increase, @rtfulk ! How are you planning on being able to afford that increase?

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Wed, 31 Jul 2024 22:23:37 GMT

Oh wow, @DinaLRosenberg ! Yea that's definitely a unique experience and hard to negotiate when theoretically the place would be so much more expensive otherwise.

How are y'all going to handle the additional expenses, and utilities costs?

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Wed, 31 Jul 2024 22:25:05 GMT

Thanks for jumping in, @WST90 ! How much of a percentage increase have you faced? Is it normal or higher than average?

How do you handle the extra costs?

That's so tough seeing others have to shut down or move as a result. Rooting for y'all and your neighborhood!

Re: In the News: Has your business rent risen dramatically?

PessoAlumni — Wed, 31 Jul 2024 22:30:03 GMT

That's some fantastic negotiation skills, @MudFire_Dex ! How were you able to get them to agree to that? It sounds like you are definitely coming out ahead there since you had to pay those repair costs anyway, might as well pay for the whole replacement -- especially for no increases for 4 years.

Did the math work out in your favor? Are y'all doing anything to make sure you can easily afford those costs?

Oh dang, those increase in price for that second space is unbelievable! I'm so sorry that it didn't end up working out after you put in so much time and effort to try and make it happen. But it sounds like the right move to pass on it. Rooting for y'all as always!

Re: In the News: Has your business rent risen dramatically?

rtfulk — Wed, 31 Jul 2024 22:41:59 GMT

@PessoAlumni For the first time in 7 years we have had to increase our prices, fortunately we import our product and cut out the middleman. We increased our clothing by 1.00 per item. It's not a huge shock to our customers and they see we are trying to keep our prices low.