Fourth Hawaiʻi Commercial Rent Survey Shows Recovery, But Relief Still Needed
The Fourth Hawai‘i Commercial Rent Survey, ending March 2021, of 790 business owners show more businesses are making full rent payments and expect to make full rent payments going forward, but there is still great need for a commercial rent relief program, according to a news release.
The easing of COVID-19-related restrictions, higher number of vaccinations and increased visitor arrivals are contributing to an expedited economic recovery.
“Business owners told us in the fourth survey that 60 percent of them were able to make full rent payments and 21 percent received some level of rent reduction,” said Ryan Tanaka, president of Island Business Management and HCRS coordinator. “However, 47 percent do not expect to survive in 2021 without government-funded commercial rent relief. A second round of PPP funding and other financial relief programs are helping severely affected businesses stay afloat, but many businesses still need to address up to 12 months of accumulated back rent while they operate at reduced capacity going forward due to physical distancing regulations.”
The fourth survey showed some improvements for businesses compared with the third survey ending December 2020. Highlights include:
- 40 percent of businesses did not pay rent in full versus 50 percent in the third survey.
- 21 percent received rent reduction compared to 15 percent in the third survey.
- 36 percent expect to miss at least one full rent payment between April and June 2021 compared to 50 percent in the third survey.
- 74 percent expect their annual revenue to decline in 2021 compared to 80 percent in the
- Still, only 5 percent of businesses have restructured their lease.
In the second quarterly survey completed in October 2020, statewide data indicated monthly unpaid rent totaled $62 million. That number dropped to $57 million in the third and fourth surveys, an improvement of 8 percent.
The data in the fourth survey was again collected in collaboration with Dr. Eugene Tian, Chief State Economist for the Hawai‘i Department of Business, Economic Development and Tourism, along with support from a number of partner organizations.
The Hawai‘i Commercial Rent Survey aims to provide state and county policy makers with developed data on the impact of accumulating commercial rent as we move towards economic recovery.
“The data is clear, Tanaka said. “All four surveys show the need for targeted commercial rent relief to rescue disproportionately impacted local businesses and protect these local jobs.”
Tina Yamaki, president of Retail Merchants of Hawaiʻi, sees the dire need for commercial rent relief in her industry.
“Retailers are one of the hardest hit industries caused by this ongoing pandemic and this survey shows there continues to be a need for help to keep businesses alive,” Yamaki said. “Almost every day we see another store close, including iconic ones that have been around for decades. The inability to pay their rent is often cited as the reason for shutting down. Unfortunately, without help in the form of commercial rent relief, we will soon see even more businesses closing their doors for good.”
House Bill 1324 to establish a commercial rent relief program passed with unanimous support through both the House of Representatives and the Senate, and is next scheduled for conference committee. This bill would carve out federal funding from President Biden’s American Rescue Plan Act to establish a commercial rent relief program.