"Nightmare on Main Street" as May rent looms

Nearly 60 per cent of small businesses say they can't pay commercial rent due to COVID-19

By
Western Investor
April 21, 2020





Stores closed or curtailed
Stores closed or curtailed during pandemic — Dan Toulgoet

In what Laura Jones is calling a “nightmare on Main Street” nearly 60 per cent Canadian small businesses say they will not be able to pay rent May 1 on their commercial properties due to the COVID-19 pandemic.

The executive vice-president of the Canadian Federation of Independent Business (CFIB) said the results of a member survey released April 20 showed that 58 per cent will not be able to pay May rent in full, and many are concerned about permanent closures

“Last week the federal government announced a new rent program, I know many business owners are anxiously waiting for the details as the stress of having bills mount with no revenue is getting more intense,” said Jones.

Rent relief is urgently needed as only one in five businesses is fully open and revenue declines are dramatic for nearly all small firms, according to survey respondents.

Some of Canada’s largest shopping centre owners, including RioCan Real Estate Investment Trust and Ivanhoé Cambridge Inc., are offering assistance, such as a rent deferrals, to retail tenants such as hairdressers and restaurants that were forced to close under government orders during the pandemic.`

But kicking rent payments down the road may be not be enough, the survey found.

“At this point, deferring rent isn’t going to cut it, businesses desperately need rent forgiveness to help pay bills. Provincial governments have ordered many small businesses to close but very few have taken any steps to help owners with the costs of paying rent on a location they cannot open,” Jones said. 

CFIB is calling for these costs to be shared by governments, landlords and tenants. CFIB ahas also called on provinces to protect commercial tenants, otherwise in good standing, from being evicted due to COVID-19. 

Of members surveyed, 75 per cent believe the cost of commercial rent that cannot be paid due to COVID-19 revenue losses should be shared between governments, landlords and tenants. 

“April 1 was scary, and it’s important to get the right government relief in place fast to prevent May 1 from being a nightmare on Main Street,” concluded Jones.

Survey results are based on 6,881 responses from CFIB members to a controlled-access web survey, on April 17 and 19, 2020.

 


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
Copyright © Western Investor

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