Kensington businesses struggle to survive pandemic
It often comes down to one factor: landlords.
Businesses in Kensington may only be a few steps away from each other, but their experiences during this pandemic have been worlds apart.
The area had seen tough economic times even before the pandemic forced businesses to shut down. More and more “for lease” signs have popped up in buildings that used to house both family-owned specialty stores and big-name corporations.
Some made the move to other areas in the city while others, like Oak Tree Tavern and Midtown Kitchen and Bar, have shut their doors for good.
But who gets to stay and who doesn’t?
Kirollos Kirollos, a commercial real estate agent in Calgary, says it often comes down to a simple factor: who your landlord is.
“Most of the time, if you just can't pay your rent, you're getting evicted—simple as that,” said Kirollos.
Debt and doubt
Kensington Fitness opened in 1999. It provided the community with a local gym, wellness programs and the sense of neighbourly connection that the area is known for. Last April, after two decades of operation, the owners were forced to announce that they were closing permanently.
“The landlord suggested we get a loan from the government for $40,000 and then we would all be ‘winners,’” Debbra Hobbs, one of the owners, said in an email to The Sprawl. “We did not see this as a win for anyone but the landlord. He would receive full rent and operating costs with no loss at all and we would be left with a large debt and no income in sight to repay this loan.”
Gyms were one of the first businesses to be shut down after COVID-19 hit Alberta. Some gyms opted to offer training services online so that their clients could workout from home, but Kensington Fitness offered weight training only—and as many of their clients didn’t own equipment, the digital switch wasn’t a possibility.
“We were not offered any support or relief, even though we proposed many options,” Hobbs said.
In six weeks we lost over $50,000 in income and the landlord wanted May’s full rent and operating costs.
The gym first closed temporarily on March 18 after paying for the full month’s rent and operating costs. They also paid their rent in April, said Hobbs, hoping the situation would be better in May.
“In six weeks we lost over $50,000 in income and the landlord wanted May's full rent and operating costs,” said Hobbs.
In April, the federal government announced a rent relief option for small businesses struggling to get by. The Canada Emergency Commercial Rent Assistance program offers a 75 per cent reduction in rent and provides commercial landlords with a forgivable loan to cover 50 per cent of rent for April, May and June should they qualify.
But for Kensington Fitness, it was already too late. And with the threat of more debt hanging over the boutique gym, rent assistance wasn’t an option.
“I am 59 years old and this business was my retirement,” said Hobbs. “It’s all I had. I now will work the rest of my life just to keep a roof over my head.”
The Sprawl reached out to Kensington Fitness’s landlord but did not receive comment by press time.
Luck turned survivor’s guilt
Just a short walk away from Kensington Fitness, Patrick Rowsome, owner at Sunnyside Art Supplies can be found getting curbside pickup orders ready for some newly-bored clients who have been adjusting to a physically-distanced life.
“We've been lucky. We've sort of struggled through, but we have an understanding landlord, which has been our biggest blessing because that's our major expense,” Rowsome said.
The store does have a bit more stability than other businesses—they implemented curbside pick-up (which Rowsome hopes to expand to delivery in the future), and they’ve been able to open up as part of the first phase in Alberta.
Even so, they haven’t had it easy. No one has.
“It got a little tough getting supplies because a lot of my suppliers are in the States and a lot of them closed down,” Rowsome said. “They're slowly opening up, so we're getting restocked.”
When Rowsome called his landlord, his rent was reduced, which he says has left him with a bit of survivor’s guilt.
We’ve sort of struggled through, but we have an understanding landlord, which has been our biggest blessing.
“Sometimes a landlord will understand and sometimes the landlord will be like, ‘Where's my cheque?’” said Kirollos, the commercial real estate agent. “It depends on the personality of the landlord or ultimately their intentions of whether they want their money now or later.”
It also depends on whether or not landlords feel confident that their tenants will be able to get through the pandemic. Looking for new tenants can be an expensive move, but that’s not always enough incentive to keep current tenants, Kirollos said.
Negotiations gone sideways
Kirollos recommends that tenants who need help need to reach out to building owners as soon as they can with a detailed plan. That’s what Ric Cutillo, owner at Midtown Kitchen and Bar, did.
Cutillo first asked for six months to be deferred and added to the end of the lease.
“They denied that and we went back. We asked for a three months deferral... they weren’t interested in that,” Cutillo said.
On April 16, the property management company came back with another solution and gave Cutillo just four days to decide.
“Our rent was just over $16,000 a month. The only relief they gave us was $8,000 a month for April, May and June, and then come July, rent was just under $20,000 for the next year and a half to repay that,” he said.
Sometimes a landlord will understand and sometimes the landlord will be like, ‘Where’s my cheque?’
Even with delivery services and curbside pickup, Midtown was bringing in substantially less than it was pre-pandemic.
“The numbers just didn’t make sense,” Cutillo said.
And so on April 20, Cutillo handed over the keys and closed Midtown’s doors for good.
Who knows what will go there next.
“Many of us restaurateurs have worked together in the past and everybody's kind of looking at stuff because they know there's going to be spaces emptied,” Cutillo said. “Unfortunately, the spaces might be an old friend's place.”
The Sprawl attempted to contact Midtown’s previous landlord via their leasing agent but did not receive comment by press time.
Starting up in challenging times
PB and J YYC, a specialty sandwich eatery, opened in December 2019—just a couple of months before the shutdowns. As owners of a young business, Carol White and Aws Abdullatif were quick to pivot into delivery services and curbside pickups to stay afloat.
"That helps a lot," White said. "It's actually increased business quite a bit. So we're almost back to what we were pre-pandemic.”
For now, rent hasn’t been an issue. White said that while they weren’t offered any assistance or support from their landlords, compared to others their rent is manageable and they’ve been able to continue paying it.
What the BIAs are trying to do is save more businesses than we lose.
But that doesn’t mean they haven’t had to make sacrifices to do so.
“We weren't paying ourselves because there weren’t enough sales and we had to take time and figure out new systems within the business,” she said.
They were looking at hiring more staff pre-pandemic, but that’s been put on hold too.
BIA aims to stave off more closures
Prior to the pandemic, Kensington was already losing more businesses than it was gaining. Since the pandemic, the community has lost eight businesses permanently.
Annie MacInnis, executive director for Kensington’s Business Improvement Area (BIA), has been working to provide businesses with as much support as possible.
“What the BIAs are trying to do is save more businesses than we lose, to try to help our businesses transition to more online shopping,” MacInnis said.
The BIAs in Calgary have also been advocating on behalf of small businesses on the federal, provincial and municipal levels. Collectively, they’ve sent letters to Premier Kenney, MLAs and Alberta MPs requesting grants for reopening and rent.
“The rental relief option has been not very good up until this point,” said MacInnis. “The portal has just become active. So perhaps now that it's become active, there will be a greater uptake.”
What will business owners who lost their shops do next? Well, for Cutillo—who also owns Citizen Brewing Company—there’s no giving up.
“I'm a chef by trade and I've been in restaurants and owned other restaurants—it gets into your blood,” he said. “I am able to fully commit to Citizen right now, and then I'm looking at some other stuff as well on the side. You can't get it out of your system.”
Hadeel Abdel-Nabi is The Sprawl’s staff writer intern.
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