Caps would help small businesses that face ‘fear of unpredictable rent,’ say Port Moody councillors

Port Moody council is calling on the provincial government to explore commercial rent caps and expand support for small businesses across B.C.

The June 24 motion, jointly brought forward by Couns. Amy Lubik and Callan Morrison and passed unanimously, asks the province to launch a pilot project to temporarily regulate commercial rent increases and to extend operational support for small businesses through WorkBC. 

Lubik said their motion would join similar motions already adopted by New Westminster, Mission, and Pitt Meadows.

“Rent caps would grant small businesses the stability to plan and invest without the constraint or fear of unpredictable rent that threatens their long-term viability,” Lubik said. “We also know that high rents are a problem for our businesses.”

Citing a recent “pulse check” survey of 83 local businesses – 69 of which lease their premises – Lubik said rent, inflation, and the cost of goods emerged as the top concerns. Additionally, commercial space is limited and expensive within city limits, and constraining economic opportunity, according to a 2022 Economic Development study.

Lubik pulled data from Canadian Business magazine, showing some businesses are suffering rent spikes ranging anywhere between 30 and 300 percent.

Lubik said that commercial rents should be regulated similar to residential rents, with increases tied to inflation or increased costs.

“This isn’t about saying rents can’t go up. . . . It means they’re predictable,” she said. “Residential tenants know when their rents are to be increased, by approximately how much, year over year.

“That kind of thinking would allow businesses to plan better and support the wellbeing of our local economies.”

A supporting study from Shop Local Port Moody found local businesses recirculate significantly more revenue back into the community than large chains – a claim backed by theTri-Cities Chamber of Commerce. According to Lubik, “local retailers re-circulate 45% of every $100 spent, compared to 17% for chains.”

Coun. Morrison drew on his own experience as a former small business owner to describe how volatile leases and spiraling costs have destabilized entrepreneurs.

He said when the lease came up, their landlord increased the base rent by 150 percent. The business was forced to leave the space as they could not longer service the debt of the original investment into the property.

“Their increase was not based on the true value of the unit. When we acquired it it was an empty shell, and we invested over $100,000 into the build out and the equipment” Morrison said. “The unit was sold to another owner during this term and marketed as being under market value to the new buyer.”

He said the commercial lease landscape unfairly burdens tenants with costs that would be prohibited in residential leases – including property tax increases, insurance hikes, and even landlord self-management fees passed on through triple-net leases.

“There are no rules for commercial leases,” Morrison said. “There are no restrictions on rent increases, and all expenses and increases in costs are passed on to the tenant. That would never ever be allowed to be passed along to a residential tenant.”

But not all councillors were fully convinced that rent caps are the right tool.

Coun. Kyla Knowles urged the province to consider a broader approach, including reform of property taxes, utility rates, and insurance costs. 

She said she worried that commercial rent control would have a “knock-on effect” of discouraging investment.

“We’ve seen this in our community,” Knowles said. “We all know how much trouble the housing development construction industry is already in, and I worry this may fast track additional layoffs.”

Mayor Meghan Lahti responded that the motion is aimed at “stability and predictability,” and should be seen as a step toward a larger conversation.

“We’re not going to solve all the issues, but moving towards that stability and predictability is what the vision is here,” Lahti said.

Other councillors emphasized the pilot nature of the request.

“This is us asking four separate ministers to consider this idea,” said Coun. Diana Dilworth, noting the city had already submitted meeting requests to the province.

Coun. Samantha Agtarap said a pilot would help identify real-world impacts and allow for adjustments: 

“This isn’t going to solve the problem entirely, but we need to look at every available option. . . . This tests the concept in a real world environment.”

Coun. Haven Lurbiecki supported the motion but pointed to broader land use dynamics as a key driver of unaffordable commercial rents.

“At the end of the day, (this) comes down to the commodification of land,” Lurbiecki said. “When we make decisions up here that rezone land . . . or we lose industrial or commercial land to luxury condos – it’s no wonder that this is happening.”

Council’s request was sent to the provincial government’s ministers of finance; municipal governments and rural communities, housing and municipal affairs; and jobs, economic development and innovation. A timeline for response is expected within three months.