Business Rent Delinquency Surges Need for Commercial Collections

Due to ongoing economic challenges, business owners’ ability to pay their full rent on time in October took a major hit based on a new Alignable poll. 

In fact, NJ delinquency rate is among highest jump up 22% in just one month, marking the largest, most rapid increase in 2022. Nearly half of all restaurants (49%) couldn’t pay their rent in full and on time in October, up 13% from 36% in September. Property managers, landlords and owners are encouraged to speak with a commercial collections attorney like Saldutti Law to discuss next steps before it gets worse. 

Three of the top 5 states directly impacted are New Jersey, New York and Pennsylvania. Due to this surge, Saldutti Law is prepared to counsel property managers, owners and landlords in maintaining positive relationships with their lessees; and recommend the necessary steps to ensure rent collection and effective recovery is at the lessors best interest.

In September, rent delinquency was at a six-month low, as optimism for Q4’s earning potential was high and some small business owners reported increased sales.

But only a month later, 37% of small business owners in the U.S. were unable to pay their rent in full and on time in October, compared to just 30% in September.  

• higher rents for 51% of SMBs
• the cumulative, negative impact of more than a year of high inflation, which has absorbed most sales gains
• recessionary fears
• steeper-than-usual gas prices (rising yet again)
• ongoing increases in supply chain costs 
• rising labor expenses and shortages, and
• a slowdown in consumer spending.

In fact, 59% of small business owners taking this poll reported that consumers are spending less this month than last. 

Tough Times: Educators, Car Dealers, Restaurants & Retail

Looking at this chart, you can see how many industries are above the national U.S. average of 37% — which is already quite high when you compare it to many other months over the past 2.5 years. Small businesses in the education sector are leading the pack, yet again, but jumping to 57% (up 13% from 44% last month).

Not far behind, we have two more records that were broken in this study — for the automotive sector and restaurants. Both reached new rent delinquency highs, tying for second place this month at 49%. This is the highest rent delinquency rate either sector has experienced in 2022. 

Small business owners who run car repair shops and auto dealerships say they’re still dealing with supply chain issues ranging from the high prices for metals and electronics, to the scarcity of inventory for some products and parts their customers need to fix their vehicles. 

Plus recessionary times when money is tight are problematic for big-ticket purchases like new cars. All of these factors are hurting small businesses in the automotive sector this month.

Restaurants’ Rent Delinquency Hits New Heights For 2022

Most restaurants are still struggling, earning as much monthly as they did prior to COVID. And based on the latest rent statistics, restaurants have hit yet another hurdle in their constant struggle to bounce back. Nearly half of all restaurants (49%) couldn’t pay their rent in full and on time in October, up 13% from 36% in September. 

Traditionally there’s a boost in restaurant activity in November and December, but we’ll have to see what next month’s poll and other economic indicators tell us. Unfortunately, some restaurateurs have shared that they are seeing fewer people eating out, largely because customers don’t have the extra disposable income to cover frequent dining out.

Retail & Transportation Take A Hit, Too

With the coming Holiday Shopping season, all eyes are on retail right now — and they aren’t smiling, especially when it comes to rent delinquency. 

Approx. 43% of all retailers say they couldn’t cover their October rent in full this month, up 12% from last month. Beyond that, 43% is close to the highest rent delinquency they’ve had all year, topped only by July’s figure of 44%. 

The transportation category is on the rent delinquency jumped 8% from September, landing at a rate of 46%. 

If you’re a property manager, owner or landlord, and need a commercial collections attorney to help you navigate your business lease contract or to provide rent collection options, contact Saldutti Law.

Saldutti Law is a creditors’ rights and debt collection law firm. Saldutti Law specializes in the areas of creditors’ rights, banking law, SBA loans, loan workouts, lease recoveries, real estate foreclosure and rent collection, bankruptcy litigation, judgment enforcement, commercial collections, complex litigation, and forensic investigations.