JACKSONVILLE, Fla. – As rent costs continue to rise, small businesses are also seeing the effects of the rent demand.
Rent has increased by 9.1% in monthly total payments through May compared to 2019 when the average was 5.9%, according to new data from the Bank of America Institute.
The data showed some places like Las Vegas, Nevada, and other cities across the United States saw higher rents.
Amelia Bourdeau, an economic consultant, said the rental prices are affecting small businesses’ profit margins.
“What’s really also eating into businesses, though, is insurance costs. And we’re all experiencing that. As consumers to the same thing as small businesses, they’re getting squeezed with their insurance costs,” Bourdeau said. “So combined, it’s pretty difficult right now for small businesses.”
Food Truck owner Chef Love said it’s even more difficult for small businesses like her Chef Love Sol Cuisine food truck to get into commercial space.
“You can’t afford it because of inflation and because after the pandemic, all the prices changed and everything changed,” Chef Love said.
Chef Love talked about the impact that small businesses have on shaping the community.
“Well, one thing small businesses, a lot of us want brick-and-mortar. It’s more convenient. We are a part of the community; we make the community,” Chef Love said. “I’m able to hire, maybe a felon or I’m able to hire a younger person to work where the bigger companies will not and cannot for whatever reason, so I can really offer a lot to the community. But if I’m in a brick and mortar to have that versatility, I can’t do that.”
Chef Love hoped the prices would become more affordable in the future to allow more small businesses to open more mom-and-pop stores.
She said she spoke to a colleague who told her that they could possibly close due to not making enough profit.
“She’s not making money, and the cost of living is so high right now. Things have changed a great deal,” she said.
Bourdeau said a lot of small businesses rely on their credit cards to get financing.
“It’s harder to get a loan right now. Lending standards have tightened and so for small businesses that may be a little bit behind perhaps on their rent, and they need a loan to cover short term,” Bourdeau said.
Bourdeau said small businesses could consider making layoffs or something along those lines, so they won’t have to close down business.
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