Paying Rent Is A Growing Concern For Maine's Small Business Owners Amid The Pandemic

Aug 13, 2020

As the COVID-19 pandemic continues, retail and restaurant owners are still suffering. Many are open or partly open, but cash flow is way down and rent is becoming a major concern.

Some businesses have gotten help from federal and state relief programs, but mostly they have been left to work out arrangements with their landlords individually. But they say it is getting harder to plan for any kind of future in the face of what could be months, or years, of uncertainty ahead.

Arcadia National Bar is a bar and arcade in downtown Portland. A cell phone video tour shows a cavernous space, with vintage video games and pinball machines, Skee Ball and bingo — and no people. Arcadia closed March 17, and since then it has mostly sat empty. Co-owner Dave Aceto says Arcadia has hosted the occasional event with takeout food or cocktails but has found no sensible way to reopen, and he doesn't feel right risking the health of his staff.

A cell phone video tour of Arcadia shows a cavernous space, with vintage video games and pinball machines, Skee Ball and bingo...and no people.
Credit Dave Aceto

Like many stores and restaurants, Arcadia is in a rented space. When the pandemic hit, Aceto talked with his landlords.

“The conversation basically was ‘we don't know what's happening, you don't know what's happening, let's try to be as much of a team as possible here and listen to each other's needs.’”

They were able to come up with an agreement that, at least for now, is working for both of them. He says he thinks his landlords, who own just one building, were more responsive than many.

“I tend to have their ear more so than maybe some other businesses around town, which I'm thankful for,” says Aceto.

Summer Allen owns Valentine Footwear in Bangor, and she has seen her revenue drop by by more than half since the pandemic started.

“We closed on March 6, were one of the first businesses in downtown Bangor to voluntarily close,” Allen says. “And then we were mandated closed after that until June 1.”

She says her landlords, who are local, came to her early on and they came up with an arrangement. But she says that's not a universal experience.

“I know a lot of people who have very, very strained relationships with their landlords, and it wouldn't take a lot for them to be even worse...I guess it depends on who you know who owns your building? How active in your community are they? Or do they live in a different state or a different country and you're just a dollar sign?”

But landlords who work with their tenants on a rent arrangement aren't motivated entirely by altruistism.

“Turnover is costly, you know, brokerage fees, tenant improvements, that sort of thing,” says Peter Harrington, a longtime commercial broker in Portland.

He admits the pandemic has hastened the end for some businesses, and some less-harmonious, or profitable, landlord-tenant relationships. But, Harrington says, even in Portland's overheated real estate market, “most landlords realize that there's not going to be a great deal of tenants looking right now. So you're better off to try to work with an existing tenant.”

In Bangor, commercial broker David Hughes says he is seeing the same thing.

“Having space be dark doesn't help anybody. So I think that, you know, as much responsibility as just good business. Sense is to work with people wherever possible.”

Meanwhile both tenants and landlords are scrambling to get by. In Bangor, shoe retailer Summer Allen says some small businesses are doing whatever they can, including deferring payments to vendors, just to stay open.

“I know a lot of people, they're like, well, that credit cards maxed out. So there's just a lot of weird things. It really just depends on how badly do you want to keep your business open and what are you willing to do to keep it open?”

And Bangor commercial broker David Hughes fears that a new level of hardship could be looming just a few months down the road.

“When the PPP [Paycheck Protection Program loans] starts to run out and when, you know, the municipalities have gone through whatever money they have for grants. And what we really start seeing is, you know, who's been able to make it? And I'm not sure we've really seen the full fallout of this yet. In fact, I think we're just beginning to see the start of it. And I have no idea what it's going to look like.”

Both brokers and business owners say it would be very helpful if the federal government were to offer grants — not loans  — to help keep small businesses operating. And if Congress manages to pass another coronavirus stimulus package, it may make PPP loans more forgivable. But until a deal is struck, small businesses are finding ways to survive, one week at a time.