An open vape store besides closed nail salon on Bay Street in Toronto on March 24, 2020.Melissa Tait
Business groups are calling on governments to subsidize rents for small businesses hit by the COVID-19 pandemic and want evictions prohibited, a protection now offered to some residential tenants in Canada.
As the April 1 rent deadline looms, small-business owners shuttered by the virus outbreak are scrambling to pay rent with little or no revenue coming in. Meanwhile, landlords argue they’re also business owners with their own bills to pay.
The stress on both sides is mounting. Politicians across Canada are asking landlords to be more accommodative to their tenants, both residential and commercial, given current cash-flow constraints. Some residential tenants have government guarantees they won’t be evicted for being late with next month’s rent, which has led to confusion around whether the same rules apply to commercial renters.
The Ontario government got a court order last week to temporarily suspend the enforcement of evictions of residents from their homes, but a spokeswoman confirmed the move doesn’t apply to commercial tenants. The Alberta government is asking landlords “to show understanding and flexibility in dealing with rent payments in this time of adversity,” a spokeswoman said, adding that “it would not make sense to evict a person or business, rather than work with them to find a solution at a time where circumstances mean there would most likely be little demand for the space.”
“It’s time for the provincial government to step in and offer the same protections to commercial renters that they’re offering to residential renters,” says Dan Kelly, president of the Canadian Federation of Independent Business (CFIB).
The CFIB also wants provinces to support small businesses by deferring or paying all or part of their rent and taxes until the economic impact of the coronavirus clears. That follows a call from various business groups for Ottawa to cover a significant share of employee wages to stave off massive layoffs.
“If we can get the feds to cover off some of the wage bill, and the provinces to cover off some of the rental costs and property and business tax costs, I think we have a fighting chance of having the majority of our small-business community survive,” Mr. Kelly says. “Without those measures, there won’t just be millions of employees who lose their jobs, but tens of thousands of businesses that will not survive the spring. … The urgency is building by the day.”
The Retail Council of Canada is also advocating for help for commercial tenants. “We’re talking to landlords, urging them to consider the economic consequences of taking too hard a line,” said Karl Littler, senior vice-president of public affairs.
William Blake, a member of the Ontario Landlord Association, also believes small-business owners aren’t getting enough financial support to help them cover rents that, in turn, will help landlords pay their bills.
“A lot of people don’t really care about what landlords are facing,” he says. “They think, ‘Oh, you’re making a lot of money.’ But a lot of people – even small commercial landlords – are struggling to find good tenants, especially with a lot of retailers leaving the industry. … We need action now; rent is due on April 1.”
If small-business owners don’t get the support needed to pay their rent, Mr. Blake says landlords will likely be next to face a financial crunch. “We need a new deal to save tenants and to keep them in business and in their stores; otherwise, they will be in a bad situation, and the landlords will be next to follow and it will harm the entire economy,” he says.
Some landlords are offering breaks to tenants, including First Capital Real Estate Investment Trust, an owner of mixed-use urban real estate across Canada. On Monday, First Capital announced a $30-million program to bring “immediate relief” to small-business owners in its portfolio. Qualifying small businesses that “demonstrate a need for assistance” can have all or a portion of their rent deferred for at least two months starting in April. A spokesman said the qualification will be assessed on a case-by-case basis.
“The program continues First Capital’s investment in our properties and tenants so that through these challenging times we can give small businesses and the communities in which they operate some short-term relief to help them thrive over the long term,” chief executive Adam Paul said in a statement.
Janis Isaman, a Calgary-based tenant of First Capital, has reached out to see if she qualifies for the rent deferral program, but believes a rent cut might make more sense since the space is closed and likely costing the landlord less to operate.
“Have we not reduced some costs because we don’t have tenants in the building?” says Ms. Isaman, a movement and nutrition coach and owner of My Body Couture. “I’m not looking for free rent or a free ride … but the idea where we are looking at zero revenue, mandated by the government, and still paying 100-per-cent rent is hard to stomach.”
And while she has emergency savings, Ms. Isaman is worried about how long the shutdown could last. A rent deferral could mean paying a massive rent bill down the road before her business has had time to recover. “This isn’t a vacation where we come back and it’s business as usual,” she says. “If we could partner in this, I would feel better about it."
First Capital says it wants to keep the deferral program uniform so it can be administered “effectively and efficiently.”
Hyeonho Yi, owner of the Lunch Buddy restaurant in an office building in Markham, Ont., is being allowed to skip rent payments, for now, due to the mandated closure.
Mr. Yi, who just opened the sandwich shop in September, says his landlord used to own a similar type of business years ago and sympathizes with his situation.
“He wants to support us as a small business. He’s a pretty cool landlord,” Mr. Yi says. “I realize it’s a pretty rare case.”
With files from Susan Krashinsky Robertson