SF Business Tenants Owe As Much as $404M in Unpaid Rent

Updated: Mar 21

  • San Francisco retail, office and industrial tenants racked up up to $404 million in unpaid rent between April and December 2020, according to the Budget & Legislative Analyst

  • Retail tenants were particularly hard hit. Between 89% and 98% of total unpaid rent was attributable to retailers, including restaurants and bars

  • The unpaid rent estimate does not include hotel tenants, who have likewise been heavily impacted by a steep drop in travel

  • The analysts recommended that the City boost support for small businesses navigating a complex set of legal challenges and aid programs at the local, state and federal levels

A new report illustrates the vast ripple effects of COVID-related business closures across the commercial retail sector, and urges San Francisco policymakers to boost support for merchants navigating a web of financial aid programs.


According to the Budget & Legislative Analyst, San Francisco business tenants racked up as much as $404 million in unpaid rent between April and December 2020 -- and that estimate doesn't include hotels. The analysts developed the estimate based on surveys, reports of revenue losses and other available data.


Small, local retail firms were particularly hard-hit, with one poll by the San Francisco Apartment Association finding that between 52% and 63% of commercial tenants in the City were unable to pay rent in full between May and October 2020.


On a monthly basis, that translated into unpaid rent of between $19 million and $45 million per month in office, retail and industrial properties, or up to $172 million and $404 million over a nine-month period. Excluding hotels, up to 98% of the total unpaid rent may come from the retail sector, which includes restaurants and bars, according to the report. Office and industrial tenants fared better.


The report recommends that San Francisco's Office of Economic and Workforce Development act as a "digital front door" in connecting business tenants with support and services at the local, state and federal level, including legal aid where needed.


On Thursday, Mayor London Breed appointed Kate Sofis, co-founder and CEO of SFMade and a member of the City's COVID-19 Economic Recovery Task Force, as the new director of OEWD. The prior director, Joaquín Torres, was appointed last month as San Francisco's Assessor-Recorder, filling a vacancy left by Carmen Chu, who was appointed City Administrator after the resignation of Naomi Kelly.


The report notes that federal aid such as Paycheck Protection Program loans appear to have been "unevenly distributed" in San Francisco: Data from the U.S. Small Business Administration shows that $3.22 billion in PPP loans were issued to 37,227 San Francisco businesses in the City between April and December 2020, and that professional and businesses services received 22% of loans, the highest of any sector. Meanwhile, rates of commercial delinquency nationwide had surged to 12% in the retail sector and 22.5% in hotels as of December 2020.


The American Rescue Plan recently signed into law expanded the pot of federal PPP loans to $813.7 billion, and opens up the program to certain nonprofits and other businesses that weren't eligible for the loans previously. The federal government also approved an Economic Injury Disaster Loan program, which covers eligible business and residential tenants.


At the state level, Governor Gavin Newsom enacted a grant program offering up to $25,000 for businesses and nonprofits, as well as other financing programs for small businesses, including those that may not be eligible for federal relief. The state also extended a moratorium on commercial evictions through the end of June, though the moratoriums don't forgive back rent.


In San Francisco, policymakers made $20 million in grants and loans available to small businesses impacted by COVID, and waived or delayed collection of certain taxes, licenses and registration fees. An additional $20 million in grants and loans are pending approval.


The Budget & Legislative analyst report recommended that OEWD focus on steering businesses through a potentially confusing process of accessing various loans and grants, and consider prioritizing businesses that have been denied assistance from federal or state programs.


The report found "four different programs staffed by different City staff and contractors providing business assistance targeted at small businesses," and noted that of the $20 million made available by the City so far, $14.5 million has been expended. Out of 15,000 applicants, roughly 9.4% of applicants received assistance from those programs. The average amount received was $10,884.


Earlier this week, Mayor London Breed introduced the Small Business Recovery Act, which mandates a 30-day turnaround time for businesses seeking permits, and a 90-day turnaround time for existing businesses seeking conditional use permits for additional activities, as well as other changes to the City's planning code.

Image by Jake Buonemani
Image by Rasmus Gundorff Sæderup
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