NEW YORK (AP) 鈥� While for small business, rents remain high and in some cases are still rising, forcing many owners into some uncomfortable decisions.
鈥淓very time the rent goes up, we have to raise prices, to keep up with the cost,鈥� said Adelita Valentine, owner of HairFreek Barbers in Los Angeles. 鈥淏ut with the cost of living, it makes it difficult on our customers.鈥�
Other owners are choosing to be late on payments or seeking out new locations where the rent is lower. A few are pushing back against their landlord.
Although inflation is easing, it remains . According to Bank of America internal data, rent payments per small business client rose 11% year-over-year in July. That鈥檚 more than twice the increase for renting and owning a residence, a metric known as shelter, according to the government鈥檚 monthly Consumer Price Index. That figure .
And although the , a of more than 6,000 small business owners found that 41% could not pay their July rent on time and in full. And 52% said they鈥檝e encountered rent spikes in the past six months.
The rent for Valentine鈥檚 barbershop rose to $4,000 in January from $3,600 in December, the fifth increase in the past eight years. She had to raise the price for her cuts from $35 to $40.
Two months ago, she moved locations for a cheaper $3,200 rent, but her space is smaller now and she sees fewer families coming in.
鈥淎 lot of people can鈥檛 afford to take a whole family to get haircuts,鈥� after the price increase, she said.
Peter Yu has owned iPAC Automotive, an auto repair and detailing shop in Ontario, sa国际传媒, for six years. He said the rent on the shop typically went up about 4% a year. But when his landlord sold the property to a new owner, Yu's rent jumped from about $1,800 ($2,500 Canadian dollars) to about $2,700 ($3,700 Canadian dollars) after three months.
He contemplated moving, but decided that the cost of a move would be more than just paying the extra rent.
Yu tried to raise prices a month ago, but customers would come in and say 鈥淥h, its too expensive,鈥� and leave, he said. So, he had to drop the price increase in order to get those customers back.
鈥淲hen we do try to raise our prices, consumers don鈥檛 have the money to pay for it. They鈥檙e looking for financing options," he said. Yu's services run the gamut from paint correction that costs a few hundred dollars to troubleshooting problematic EV battery and electric drive units for out-of-warranty Teslas that can cost up to $15,000.
So instead, he鈥檚 going to try to improve his marketing, close more sales, and find a way to offer more financing.
Standing firm against a landlord sometimes works. Janna Rodriguez has run her home-based in Freeport, New York, since 2018. When she first signed her lease, she paid $3,500, plus costs including landscaping and maintenance. In 2020, the pandemic began, and her landlord raised her rent to $3,800 and also made her start paying half of the homeowner鈥檚 insurance. Last year, the landlord raised her rent to $4,100, plus the additional expenses.
Rodriguez raised her prices for the first time, by $10 per child per week, to help offset the rising rent.
This year she successfully pushed back when the landlord wanted to raise the rent yet again.
鈥淚 said to them, if you do that, then I鈥檓 going to find another property to move my business to, because at this point now you鈥檙e trying to bankrupt a business, right?鈥�
It鈥檚 worked 鈥� so far. But Rodriguez is worried about the future.
For others, negotiating a late payment is an option. Nicole Pomije owner of Minneapolis-based , which makes cookie kits for kids, has a 4,000-foot office space along with a warehouse where she develops her line of baking kits. Her rent rose 10% this year to $4,000 monthly. Then there are unanticipated bills, such a $1,500 for snow plowing.
鈥淭here鈥檚 so much stuff that pops up that you just you never expect,鈥� she said. 鈥淎nd it鈥檚 always when you never expect it.鈥�
Pomije hasn鈥檛 raised prices, but instead tried to mitigate the higher rent costs by buying materials in bulk 鈥� like ordering 5,000 boxes instead of 1,000 boxes for a 40% discount -- and finding cost savings elsewhere.
Still, there have been several months the past couple of years where she couldn't pay rent on time. So, far the landlord has been amenable.
鈥淚f we have a conversation like hey, we don鈥檛 know if we鈥檙e going to make it for the first this month. It might be closer to the tenth," she said.
Asked if she thinks costs might ease in the future, Pomije said she is focused on the present.
鈥淚t鈥檚 weird, but I鈥檓 trying not to think about the future too much and I鈥檓 trying to just do what we have to do, and get ready for a holiday season and just, like, get everything paid on time now,鈥� she said. 鈥淎nd then we鈥檒l kind of reevaluate everything in January.鈥�
Mae Anderson, The Associated Press
