Fourth Hawaiʻi Commercial Rent Survey Shows Recovery, But Relief Still Needed
News Release from Island Business Management, April 13, 2021
The Fourth Hawai`i Commercial Rent Survey diagnosed how businesses are faring with commercial rent through March, 2021. 790 Hawaii business owners shared their feedback; and while we are seeing the commercial rent situation is starting to improve, we’re still not out of the woods.
The delicate balance between managing the new number of COVID-19 cases while easing restrictions has led to a rebound in visitor arrivals. As the market is shifting quickly, various forms of financial relief including but not limited to the second round of PPP is helping local businesses to stay afloat and preserve local jobs.
In addition to daily case count, a new guiding metric to manage the COVID-19 pandemic is the number of statewide vaccinations. The transition towards herd immunity is helping to improve consumer sentiment and contribute to an expedited economic recovery. The fourth survey ending March 2021 showed some improvements for businesses compared with the third survey ending December 2020.
• 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 third survey.
• Still, 47 percent do not expect to survive in 2021 without government-funded commercial rent relief, and only 5 percent of business have restructured their lease.
Despite a number of tailwinds steering the economy towards a V-shaped recovery, Congress’ recent stimulus package won’t address the twelve months of accumulating back rent many Hawai`i small businesses disproportionately suffer from.
Without a catalyst to help negotiations with commercial landlords, many small business tenants realistically may not survive from the economic devastation brought by COVID-19. Businesses still need to follow social distancing measures and be prepared for a step backwards in the tier system.
We continue to monitor the status of commercial rent statewide so that we can provide lawmakers with hard data to back up our request for commercial rent relief.
Thank you for taking the time to fill out our survey and read our report.
Also, mahalo to our partners who made these quarterly surveys possible.
As Hawaiian scholar Mary Kawena Pukui said, A`ohe hana nui ka alu`ia. No task is too big when done together.