Hawai‘i Commercial Rent Survey Sheds Light on Hardships Facing Small Business Owners
The Hawaiʻi Commercial Rent Survey released its survey findings today to help government leaders understand the urgent plight of small businesses in Hawaiʻi.
The survey reveals insights and quantitative data on how small businesses across the state have been financially impacted by the 2020 COVID-19 economic downturn.
“Central to the survival of tenants and property owners alike is the fact that counties continue to collect property taxes in full, resulting in a domino effect of landlords needing to cover their expenses from small businesses’ occupancy,” according to a press release issued by Island Business Management, LLC, one of the survey partners.
According tot he company, survey evidence “strongly suggests” that local businesses that were forced to temporarily suspend operations or reduce operational capacity “are left hanging in the balance – unclear if they’ll be forced to permanently close.”
“With limited relief packages available to commercial property owners, this survey helped us better understand the real-world hardships that small business owners face as they try to pay rent,” said Ryan Tanaka, President, Island Business Management, LLC. “Our goal now is to provide a catalyst for both landlords and tenants to increase their runway and survive this pandemic through the recently proposed Occupancy Relief Program.”
The proposed Occupancy Relief Program would reportedly set aside millions of dollars Hawaiʻi gets from the CARES Act “to pay commercial landlords when business tenants cannot.” (KITV – May 10, 2020)
Supporters of the Occupancy Relief Program say it would “promote goodwill and long-term benefit” by providing resources for rent payments for small businesses as well as encouraging increased communication between these businesses and their landlords. “Keeping small business owners healthy and preserving their entrepreneurial spirit can unleash economic recovery, protecting both jobs and tax revenue,” according to the company.
According to Tanaka, an estimated 1,234 business owners that employ between 22,000 and 39,000 individuals, responded to the survey across Oʻahu and our neighbor islands. “Their shared experiences will better equip policymakers with data to drive the discussions,” he said.
Key findings of the survey are outlined below:
According to the survey, revenue will not increase to previous levels until tourism returns. The survey finds that businesses across Hawaiʻi need help reducing expenses to compensate for lost revenues.
- 44% of businesses that have not paid rent at all are currently closed.
- 62% of businesses have not received any rental assistance at all from their landlord. Rent deferral was the most common form of rental assistance over rent reduction and rent restructure.
The demand for rent assistance climbs as businesses anticipate more staff cuts and other reductions to survive.
- 86% expect their annual revenue to decrease in 2020 and only 2.2% were able to restructure their rent.
- One out of five businesses that expect to miss rent payments, expect to be unable to pay 4 to 6 months of rent in full between June and December 2020.
The survey was designed in partnership with Island Business Management, LLC, Department of Economic Development & Tourism (DBEDT), NAIOP Hawaiʻi, Chamber of Commerce Hawaiʻi, Hawaiʻi Restaurant Association, Retail Merchants of Hawaiʻi, Hawaiʻi Food Industry Association, Hotel Lodging & Tourism Association, Hawaiʻi Executive Collaborative, First Hawaiian Bank, Central Pacific Bank, American Savings Bank, Bank of Hawaiʻi, Aloha Pacific Federal Credit Union, and Hawaiʻi USA Federal Credit Union, among others.
Detailed survey results are anonymous and only aggregated totals and averages calculated from the respondents were compiled for the analysis.
Click here for full results of the Hawaiʻi Commercial Rent Survey.