Rent increases are harming small businesses across much of the U.S., according to a recent Bank of America Institute survey. And these struggles are forcing some small business owners to consider new locations.
The latest data from Bank of American Institute, which was released in June, found that around 43 percent of small businesses in the U.S. are unable to fully pay their rent on time. That is the highest level since the height of the COVID-19 pandemic in March 2021.
These small business rent woes are largely concentrated in major cities, largely in the western portion of the country, including Las Vegas, San Diego, and Denver. Some cities along the East Coast like Washington D.C. are experiencing similar issues as well.
Though these cities offer plenty of consumer traffic and other benefits for businesses, the high price of rent has some business owners considering a location change.
Tim Baca, owner of Denver Crystal and Gems, in Denver, Colorado, is one small business owner considering a move due to increasing rent. He told Fox Business, “I have been looking also in other states because there’s a lot of people moving out of Colorado, out of Denver, a lot of businesses, because the price is too high to run business.”
Moving to a new city is a drastic change for a small business. But rent is often the largest expense, so skyrocketing costs in this area can make it nearly impossible for companies to turn a profit.
Inflation is leading to increased costs in tons of areas. But small businesses provide serious value for the communities they serve. So if they end up priced out of certain markets due to unaffordable rents, communities and customers could suffer. However, if cities address the issue, or if rents start decreasing after small businesses move to less expensive locations, it could open up more affordable options again.
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