A new survey by the Brooklyn Chamber of Commerce details the city’s ongoing commercial rent crisis, as 50 percent of businesses could not pay full rent in November, up from previous months’ reporting and a troubling sign for businesses struggling to recover from the economic impacts of the COVID-19 pandemic.
Another clear signal of the stress that COVID-19 is having on the economy: 40 percent of respondents pay more than one quarter of their monthly revenue in rent and 16 percent pay more than half.
According to 264 Brooklyn-based survey takers representing restaurants, bars, retail, health and wellness, professional services, and other small businesses, 48 percent said they owe back rent for previous months. As thousands of small businesses across the city are teetering on the edge of survival, this factor could bankrupt many if New York’s moratorium on evicting commercial tenants is lifted without any counterbalancing financial relief.
Perhaps a small glimmer of hope for small businesses in crisis is a growing number of landlords who are offering rent concessions. Nearly half of businesses (49 percent) received some form of rent concessions in November (up from 25 percent in September and August), with 21 percent receiving rent reductions, and 21 percent receiving rent deferrals where the amount owed was tacked on to the back end of the tenants’ lease.
“Small businesses are on life support and struggling to survive,” said Randy Peers, Brooklyn Chamber of Commerce president and CEO. “For most, stimulus funding through PPP has long been exhausted and many businesses that are uncertain about the future are now hedging their bets over what rent they can afford to pay.
“The mandated closure of businesses in South Brooklyn was nearly fatal, and another wholesale shutdown in the future could bring total collapse,” he added. “Small businesses urgently need another federal stimulus package and ‘recovery leases’ proposed at the state level, which relieve crushing rent bills and address past-due payments.”
Small business owners from across the borough echoed Peers’ sentiments.
One MWBE health and wellness small business owner from the Midwood neighborhood that was recently forced to shut down said, “We reopened in July, and after three months had to close again since my business is in the red zone. I paid rent when we were closed, and my landlord is asking for rent now too even though we were closed 5/12 months of this year. I don’t know what we can do.”–>
A restaurant owner in Downtown Brooklyn added, “We have paid 50 percent of rent since June, with the balance being deferred to the end of the lease. It has helped to keep us open from a cash flow perspective, but we are digging a large hole and I don’t see how we will get out of it without some financial help.”
An MWBE business owner of a Cobble Hill tutoring center that recently permanently closed said, “After 6 months of not being able to pay my commercial rent, zero concessions from my landlord and no assistance from government or philanthropic groups, I closed my storefront.”
One MWBE restaurant owner in Williamsburg stated simply, “Just cannot afford to pay the rent anymore.”
A Park Slope entertainment small business owner said abruptly, “No concessions, constant demands for back rent from our period of forced closure, legal threats.”