Rent Inflation Pressures Small Businesses, Bank of America Data Shows

The rising cost of rent is putting pressure on small businesses across the country, according to new data from the Bank of America Institute. The average monthly share of rent in total payments has increased significantly, reaching 9.1% compared to the 2019 average of 5.9%. In some areas like Las Vegas, the average share of rent is even higher.

However, there is some relief for small businesses in the form of easing wage inflation. Total nonfarm payroll growth remains strongest in the South, with cities like Charlotte and Tampa seeing payroll payments over 30% higher than in 2019.

The data, which was analyzed from small businesses that pay rent through their Bank of America accounts, also shows a 12% year-over-year growth in average monthly rent payments per client. This increase is largely attributed to inflation rather than businesses upgrading to larger spaces.

Despite the challenges, there is a bright spot in the form of the inflow-to-outflow ratio, which is seen as a proxy for profits. The ratio rose in May to its highest level since March 2023, indicating some positive trends for small businesses.

Overall, the data highlights the ongoing struggles that small businesses face due to rent inflation, but also points to some positive developments that could help alleviate the pressure in the future.