In his recent video, real estate expert Michael Bordenaro sheds light on the escalating rent crisis plaguing small businesses across the United States. The latest data indicates that, by November 2023, a staggering 41% of these enterprises were unable to meet their rent obligations, marking a troubling increase from 30% at the beginning of the year.
The Unfolding Disaster
Bordenaro’s recent video addresses the concerning trend of small businesses struggling to survive, emphasizing the severity of the situation. With a focus on the retail sector, Bordenaro highlights the closure of 4,600 stores in 2023, overshadowing the mere 5,500 new openings. The net gain of only 900 stores across the nation paints a bleak picture of the economic landscape.
The heart of the issue lies in the revelation that nearly half of small businesses surveyed reported an inability to pay their rent, raising questions about the economy’s overall health. The data, meticulously gathered by Alignable, a small business referral network, showcases the dire circumstances faced by entrepreneurs.
Impact on Real Estate Agents
The turmoil extends beyond the business realm, affecting even those in the real estate sector. Bordenaro underscores that 45% of real estate agents with their own companies struggled to pay office rents as of November 2023.
This figure, a 5% increase from October and a substantial 10% surge from September, signals a deepening crisis.
Alignable’s study dives into the reasons behind this economic upheaval. Small businesses point to soaring interest rates as a significant challenge, with 58% expressing concerns about reduced consumer spending and increased difficulty securing loans.
Inflation further compounds the issue, impacting businesses’ operating ability with rising costs.
Additionally, the study reveals that 49% of businesses blame online retail giants, like Amazon, for siphoning customers away from local establishments. This shift in consumer behavior exacerbates the struggle for businesses already grappling with rent and operational costs.
The Ripple Effect
The consequences of this rent crisis extend far beyond the immediate financial burdens faced by individual businesses.
Bordenaro warns that the domino effect could lead to increased unemployment, reduced sales volumes, and a surge in delinquencies across various sectors, including credit cards, car loans, and mortgages.
As the Federal Reserve hints at potential interest rate cuts in 2024, some hope for relief emerges.
However, Bordenaro and other experts remain skeptical about the efficacy of such measures, given the deep-rooted issues faced by small businesses. The looming question is whether these interventions will be too little, too late, as small businesses continue to grapple with an economic storm on Main Street.
YouTube commenters shared some insights of their own: “What folks fail to understand when buying a house…the house payment isn’t really the problem it’s the greedy SOBs who set the tax rates. Learned this lesson the hard way and glad I was able to sell the boat anchor years ago. Please pass along to potential buyers to look into the tax rates.”
Many people complain about the prices going up in general: “It’s because no one is willing to buy $17 hamburgers and $9 beers anymore. That’s $40 for a burger and two beers with a tip.”
Some shared their experiences: “I just shut down my side business ( private investigations). I went from grossing $46,000 four years ago, to just grossing $21000 in 2023. It just wasn’t worth the hassle any more with a good retirement already set up.”
“I literally closed my business last year, because of this very thing. Got tired of working just to pay rent & utilities.” added another commenter.
A Bleak Outlook for 2024
The small business rent crisis, as exposed by Michael Bordenaro, paints a dire picture of economic instability. With 41% of small businesses struggling to meet rent obligations, the repercussions are felt across sectors, raising concerns about the long-term health of Main Street enterprises.
As the nation braces for potential interest rate cuts, the economic storm on Main Street shows no signs of abating, leaving entrepreneurs and communities in the grip of uncertainty.
Are you a small business owner? What do you think about this? As small businesses grapple with soaring rents, what does this trend foretell for the future of local economies and community vibrancy?”
In the face of rising rent challenges, how can policymakers and communities collaborate to foster an environment where small businesses not only survive but thrive? Does the struggle of small businesses against escalating rents underscore a fundamental shift in consumer behavior, and if so, what does it mean for the fabric of our neighborhoods?”
