A local business coalition is spearheading a national commercial rent survey in December to complement ongoing state surveys to better illustrate the direct impacts of the COVID-19 pandemic on Hawaii and the U.S.
The inaugural National Commercial Rent Survey, an expansion of the Hawaii Commercial Rent Survey, will be launched on Dec. 1 and run through Dec. 18, according to Ryan Tanaka, president of Island Business Management, in an effort to be part of a nationwide conversation.
“Small businesses represent the economic foundation and backbone of many communities across the country, including Hawaii, so to have this type of detailed research and data to understand the impacts to the business community in invaluable,” said Tanaka in a news release. “Hawaii is a microcosm of what businesses are feeling across the country, and while there is no silver bullet solution, additional data and insights can help Congress make better decisions about future aid for business in an effort to revitalize the national economy.”
Tanaka organized the surveys with the support of the state Department of Business, Economic Development and Tourism, along with more than a dozen businesses and trade groups including the Retail Merchants of Hawaii and Chamber of Commerce Hawaii. The national survey is the third one to be conducted, following two state-level surveys done over the summer and fall.
DBEDT will administer the national survey, which will reach out to mainland markets in partnership with the Seattle-based Center for Housing Economics. NAIOP, a commercial real estate development association, is also a survey partner.
Tanaka first launched the surveys to support advocacy efforts for a commercial landlord-tenant grant program that would use federal coronavirus relief funds to help Hawaii businesses cover their commercial rent during the pandemic.
Honolulu City Council in September approved a resolution aiming to provide rent relief to business through a grant program for landlords. Although Honolulu’s commercial property owners would apply for the grants, the funds would go to their tenants in the form of rent relief, according to Tanaka, who is part of a business coalition advocating for the grants.
Despite the resolution’s approval, however, no program has yet been implemented, and the coalition is hoping commercial rent relief will be considered in the next round of stimulus funds Congress is considering.
“These businesses in order to survive, they need a financial lifeline,” said Tanaka. “Landowners would be more willing to work with them if they receive some sort of rent relief during these lockdowns.”
Results of second survey in October revealed that even more Hawaii businesses were suffering financially with the continuation of the COVID-19 pandemic, and that many have had to scale back their workforce and lay off employees.
The second survey, which included feedback from more than 1,400 businesses across Hawaii, found that:
>> Four in 10 businesses have not paid their rent in full
>> Three in 10 businesses expect to miss three full rent payments between October and December this year
>> Tourism accounts for at least one quarter of the overall revenue of 42% of businesses
>> 86% of businesses expect their annual revenue to decrease this year, and 82% expect it to decrease in 2021
>> Only 11% of businesses received rent reduction
>> Only 5% of businesses were able to restructure their lease
Tanaka said even though time is running out, many businesses can still be saved by commercial rent relief. If 5% of businesses have restructured their leases, then 95% of deals are still pending and could be worked out, he said.
“There isn’t a lot of help out there for commercial property owners at this time, but they are a big part of the economic recovery framework,” he said in the news release. “Even though it is November, our program could still be activated in two phases with the first part now using a smaller tranche of CARES Act money, followed by additional support allocated in the New Year. However, time is running out and we can expect more business closures if we don’t do something now to help keep businesses alive.”