The Hidden Crisis Facing Small Business Tenants: A Denver Perspective on Rising Operational Costs

Written by:

Rudi Davis

Date:

01 Oct 2025

Share

Share via Facebook

Share via Linkedin

Share via X

Copy to clipboard

Small businesses are facing an unprecedented convergence of cost pressures that’s “choking out” operators and reshaping the industrial real estate landscape, according to one Denver-based industrial property expert.

“It’s hard to be a small business right now, with taxes going so high, insurance going through the roof, tariffs, all of these unknowns are just choking out small businesses, and it’s ugly,” says Aviva Sonenreich, host of Commercial Real Estate Secrets and Managing Broker of Warehouse Hotline.

The Mounting Cost Burden

According to Sonenreich, who manages 110 industrial units across the Denver market, the current environment presents multiple challenges for small business tenants, particularly those in the trades and e-commerce sectors. The combination of rising taxes, surging insurance costs, and new tariffs has created what she describes as an especially difficult operating environment.

“It’s hard enough for businesses to exist right now, let alone start a new business,” Sonenreich observes, noting that these pressures are particularly acute for her core tenant base, which includes HVAC contractors, roofers, plumbers, and construction companies.

Market Impact

The cost pressure is manifesting in several ways across the industrial real estate market, Sonenreich says. Tenant demand has softened noticeably, with businesses taking longer to make leasing decisions and showing increased hesitation during negotiations.

“Everybody is finding massive hesitation in the market, taking everybody longer to sign, everybody longer to lease,” Sonenreich notes. “Pricing is at the forefront of everybody’s mind, not that it’s not always, but with these new tariffs, it’s even more so.”

The ripple effects extend beyond just the leasing market. Sonenreich points to conversations with leading brokers both locally and nationwide who report similar challenges, suggesting this isn’t just a regional phenomenon but potentially a broader shift in the small business landscape.

Adapting to New Market Realities

For property owners and managers, these conditions require new approaches to staying competitive. Sonenreich suggests the key lies in understanding the fundamentals of property acquisition and management.

“The way you can get competitive with leasing spaces is buying it correctly,” she explains. This focus on entry price becomes especially critical during periods of market stress when tenant affordability is paramount.

Looking ahead, Sonenreich suggests these pressures on small businesses could have lasting implications for the industrial real estate sector. While established businesses struggle with rising costs, the barriers for new business formation appear to be growing higher, potentially affecting future tenant demand.

For now, property owners and managers are focusing on ways to maintain competitiveness while helping their existing tenants navigate this challenging environment. As Sonenreich notes, success in today’s market requires a careful balance between maintaining property values and acknowledging the very real pressures facing small business operators.