Houston small businesses and landlords grapple with rent relief options during COVID-19 crisis

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Houston small businesses are struggling to pay their rent with doors closed and operations ceased — but where should the relief come from? Getty Images

It's not too huge of an assumption to make that many Houston startups and small businesses failed to pay their rents in full yesterday. Since the city's stay-at-home mandate on March 24 — and even preceding that — most businesses have seen a slowdown of revenue as a result of COVID-19-caused business disruptions.

Business owners are frantically looking in their leases and searching online to see what rights they have and what sort of protection they have in such an unprecedented time.

"People are confused. They don't know what to do, and finding information is hard," says Meredith Wheeler, co-founder and chief creative officer of Sesh Coworking, which opened earlier this year.

Wheeler and Sesh's co-founder, Maggie Segrich, have created a petition to get on the radar of local elected officials to challenge them to pass legislation to protect small businesses in this time.

"At the end of the day, it would be so wonderful and idealistic to say that we could rely on the niceties and the moral compasses of our landlords, but it's probably not true for everyone and so that's why we need legislation to dictate what is right," Wheeler says.

But landlords are also in unchartered territory, says Josh Feinberg, who has worked in Houston as a commercial real estate broker and co-founded CRE tech platform, Tenavox.

"There's this idea that there's this acrimony between tenant and landlord, and I think, as a former broker, we're set up that way to get our side the best deal. But in reality, that's just not true," Feinberg says. "The majority of commercial real estate is owned by regular people — not usually some faceless, gigantic corporation."

And they have a piper to pay too, Feinberg adds. Ninety percent of CRE is owned by debt, he says. If the government steps in anywhere, it should be on the lender level, as well as creating some sort of tax relief.

"If there's any relief here, it's going to have to come from lenders, and I think you'd hear that from owners and brokers," Feinberg says.

In somewhat convenient timing, Tenavox has recently co-founded a new company that provides a bit of a solution for small businesses. Otso provides landlords with an alternative to cash security deposits. Traditionally, deposits are held onto by landlords — they aren't legally allowed to spend it unless the tenant defaults.

"In general, I think cash deposits are wasteful," Feinberg says. "It's critical capital that the business can hire with, invest, and use."

Tenavox teamed up with Euler Hermes, a 135-year-old credit insurance company, to create Otso, and the credit company backs the lease performance of each tenant that is approved by Otso. The transaction calls for a fee added to the rent, but no large cash deposit would be required.

The tool can be used on new leases, and, in light of the current situation, Otso can also be used to create an addendum in existing leases so that the tenant can get back their deposit and use it in this time of crisis. Either landlord or tenant can apply online and hear back that same day — Feinberg says he's focused on a speedy response to help get this deposit money back to the tenant.

"If we can get some liquidity back into the hands of the business, they have some a better chance of survival," Feinberg says.

Other than looking into Otso, Feinberg has some other recommendations for small business owners. He says they should be applying for relief from the Small Business Administration, which has more money to dole out than they have ever had. And, as it pertains to working with their landlords, communication is key. Show financials and specific information — like what March 2019 looks like compared to 2020 — so that landlords can take that to their lenders.

"An unprecedented crisis is going to require unprecedented solutions," Feinberg says.
Marc Nathan, Meredith Wheeler, and Maggie Segrich are this week's Houston innovators to know. Courtesy photos

3 Houston innovators to know this week

who's who

Passion is usually the motivator for starting a business, and this week's innovators to know have an undeniable passion for what they are doing.

Marc Nathan is passionate about Texas startups — it's why he started and still maintains a comprehensive newsletter of Texas innovation news. Meanwhile, Maggie Segrich and Meredith Wheeler are passionate about bringing together a community of women with Sesh Coworking.

Here's more of what you need to learn about this week's innovators to know.

Marc Nathan, vice president of client strategy at Egan Nelson and publisher of Texas Squared

Marc Nathan shares how he's seen the city of Houston's innovation world change dramatically over the past few decades. Photo courtesy of Marc Nathan

While he technically lives in Austin now, Marc Nathan is extremely proud of his Houston heritage. A third generation Houstonian, Nathan worked as an entrepreneur before getting involved with the Houston Technology Center. The University of Texas alum's current role at Egan Nelson — an Austin-based, startup-focused law firm, that brought him back to Austin a few years ago.

As much of a Houstonian at heart he is, Nathan is a major player in the entire Lone Star State's innovation world. He publishes a weekly newsletter, called Texas Squared, that he hopes can connect the dots between Texas's four innovation ecosystems — Dallas, Austin, San Antonio, and Houston, or DASH, as he likes to call them.

"I can tell you 10 years ago being an innovation person in Houston, I couldn't have told you anything about what was going on in Dallas or Austin," Nathan says on the most recent episode of the Houston Innovators Podcast. "Now, we're seeing a lot more collaboration among cities, and I think it's very important and useful."

Read more and stream the episode here.

Meredith Wheeler and Maggie Segrich, co-founders of Sesh Coworking

sesh coworking

Meredith Wheeler and Maggie Segrich founded Sesh Coworking after years of working from home and feeling the need for a community. Photo courtesy of Sesh

Working from home can be extremely isolating, but Meredith Wheeler found the "bro culture" of coworking off putting. For years she craved a female-focused community, and now with her business partner, Maggie Segrich, she's created exactly that with Sesh Coworking.

"We come at the creation of this space and the running of this community from the female experience," Wheeler tells InnovationMap. "Most coworking spaces, when they are run only by men, it's natural that they are coming from their perspective and experience."

The coworking space in Montrose officially opened for business on Feb. 3. Sesh has memberships and day passes available for anyone who wants to cowork, but the space is designed from the female perspective.

"For me, starting Sesh is kind of like giving women that space and opportunity to let their guard down, and feel like they can be their actual selves," Segrich says.

Read more and check out photos of the Sesh space here.
Sesh Coworking is committed to providing quality coworking space for women and by women. Photo courtesy of Sesh

First female-focused coworking space opens in Houston

Calling all women

For so long, women have been influenced on how to behave professionally at work and expected to leave home life at home. But two female entrepreneurs are flipping the switch on that way of thinking with their new coworking space.

"We as women show up in our work lives as a whole person. We don't compartmentalize and forget about all the other things happening in our lives," says Meredith Wheeler, co-founder and chief creative officer of Sesh Coworking. "We wanted a space that reflected that and embraced it."

Sesh officially opened its doors this week at its new 2,000-square-foot space in Montrose (1210 W Clay St #18). Wheeler co-founded the company with Maggie Segrich after hosting coffee and coworking meetups for women around Houston for over two years.

sesh Meredith Wheeler and Maggie Segrich founded Sesh Coworking after years of working from home and feeling the need for a community. Photo courtesy of Sesh

Segrich, who has been a jewelry designer based in New York then Houston, and Wheeler each have a story of working from home and feeling a lack of community. Through the coffee and coworking sessions, the duo realized they weren't alone.

"There has been, in the last four to five years, this rally cry for women to come together and to feel that sense of community, whether that's as mothers, runners, in a gym, entrepreneurs, artists, and makers," says Segrich. "So, for me, starting Sesh is kind of like giving women that space and opportunity to let their guard down, and feel like they can be their actual selves."

While Sesh is open to all, the structure and style of the space is different from other coworking offices. For Wheeler, that's by design. She remembers living in California and checking out a coworking space that had a "bro culture," and while she loved the idea of coworking, she didn't join that space. However, it planted a seed in her, she says.

"We come at the creation of this space and the running of this community from the female experience," Wheeler tells InnovationMap. "Most coworking spaces, when they are run only by men, it's natural that they are coming from their perspective and experience."

Last fall, Sesh hosted a pop-up coworking space in Downtown for nine days. They put on multiple events a day — from career focused to wellness — as a bit of a sample of what they planned for their permanent space. It was stressful and fast moving, but it showed the women what their potential membership wanted.

"Flexibility is kind of the name of the game right now," Wheeler says.

In their permanent space, Sesh plans to offer programming around business career and fitness and wellness, including daily kid-friendly hours.

The office space itself, which was designed by Blue Water Studio's Kimberly Phipps-Nichol, is rentable for events, and members can join and pay monthly or buy packs of day passes. The space features desks and couches, plus a full bathroom with a shower and lockers that are rentable. There is also a meeting room and wellness space that are able to be rented by members.

"We're re-writing the playbook on what your work experience should be," Wheeler says.

Setting up shop

Photo courtesy of Sesh

Coworkers can check in upon arrival and even purchase select items at the front desk.
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3 Houston innovators to know this week

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As Houston transitions into summer, the city's tech and innovation ecosystem enters a new season — but with the same level of entrepreneurialism and can-do spirit.

This week's innovators to know includes a Houston tech founder fresh off fundraising, an architect with the future of the workplace, and a startup leader with a way to digitally connect churches to their congregations.

Joe Alapat, CEO and co-founder of Liongard

Courtesy of Liongard

After raising a $17 million round for his startup, Joe Alapat, CEO of Liongard, joined the Houston Innovators Podcast to discuss fundraising during a pandemic and how he's seen the Houston innovation ecosystem grow.

In the episode, Alapat also shares his advice for Houston startups looking to tap into the Houston innovation ecosystem — something he's watched grow over the past five years. Now, he says, when it comes to new startups in Houston, "the waves are hitting the shore."

"Houston has always been an entrepreneurial city, and this is just that next stage," Alapat says on the episode. "For me, it's the technology side that excites me even more to see technology companies really succeeding." Listen to the episode and read more.

Day Edwards, founder and CEO of Church Space

Photo courtesy of Church Space

Large gathering places have been shut down for months at this point, and that includes places of worship. Houston entrepreneur Day Edwards, founder and CEO of Church Space, usually focuses on connection organizations to spaces for worship or events. But, she is now focused on getting services online for congregations to connect with.

"It felt like the perfect opportunity to give churches a way to reach more people during the pandemic," says Edwards. "This would create more impact than anything we could possibly offer at this time." Read more.

Larry Lander, principal at PDR

Photo courtesy of PDR

While much of the country has been working from home for weeks, Larry Lander opines that this has made physical office space more important than ever.

"As a place to provide a technology offering we don't enjoy at our kitchen table, as a place to better support small group work beyond the tiny real estate of our laptop screens, and as a place that physically represents what our organizations are truly all about," he writes in a guest column for InnovationMap. The role of the workplace has never been more critical to business success." Read more.

Houston area gets failing score on social distancing, according to report

We got an F

According to a study that evaluated social distancing execution in counties, the Houston area didn't do so well and earned failing scores all around.

A widely used social distancing scoreboard from Unacast, a provider of location data and analytics, shows only one county in the Houston area — Austin County — received a grade above an F for social distancing as of May 20. But Austin County doesn't have much to brag about, since its social-distancing score is a D-. The Houston area's eight other counties, including Harris, flunked.

Relying on a huge storehouse of cellphone data, the Unacast scoreboard measures social distancing activity on a daily basis in every state and county compared with activity before the coronavirus outbreak. The scorecard assigns a letter grade of A through F based on current social-distancing behavior.

Each grade takes into account three factors:

  • Percentage change in average distance traveled compared with the pre-coronavirus period
  • Percentage change in visits to nonessential places compared with the pre-coronavirus period
  • Decrease in person-to-person encounters compared with the national pre-coronavirus average

So, how did Harris County, for instance, fare in those three categories? On May 20, its grade in each category was an F. Why? Because it had less than a 25 percent reduction in average mobility (based on distance traveled), less than a 55 percent reduction in nonessential visits, and less than a 40 percent decrease in "encounters density" compared with the national average.

The scoreboard indicates Harris County's grades have bounced around. On April 4, for example, Harris County received an A in the nonessential-visit category for reducing those visits by at least 70 percent.

Dr. Peter Hotez, dean of the National School of Tropical Medicine at Baylor College of Medicine in Houston, said in an interview published May 20 that he's worried the easing of social distancing in Houston will lead to a spike in coronavirus cases.

"I think here in Houston we're underachieving in a lot of aspects in public health, and it's no fault of the … public health leaders," Hotez said.

In Texas, the Houston area isn't alone in its apparent failure, at least recently, to adhere to social-distancing guidelines.

On May 20, not a single county in the Austin, Dallas-Fort Worth, and San Antonio metro areas earned higher than a D on the Unacast report card.

All five counties in the Austin area got F's, as did all 13 counties in Dallas-Fort Worth, according to the scoreboard.

But as with Harris County, other metro areas' scores in individual categories have fluctuated over time. Here are a few examples:

  • On April 4, Travis and Dallas counties earned an A for at least a 70 percent reduction in nonessential visits.
  • On April 11, Tarrant County received a B for a 55 percent to 70 percent drop in average mobility.

In the San Antonio area, Bandera County earned the highest grade (D) of any county in the state's four major metros. Atascosa and Medina counties eked out grades of D-, while the remainder of the area's counties wound up in the F column.

In line with trends for its major-county counterparts, Bexar County's social distancing scores in individual categories have gone up and down. On April 11, for example, Bexar County earned a B for a 55 percent to 70 percent decline in average mobility.

The scores for the state's major metros appear to reflect the recent loosening of stay-at-home restrictions across Texas. But health experts still recommend sticking with social-distancing measures to slow the spread of the coronavirus. In fact, Unacast points out that the World Health Organization and the U.S. Centers for Disease Control and Prevention (CDC) cite social distancing as the "most effective way" to combat coronavirus infections.

Unacast says it launched the social-distancing scoreboard in March to enable organizations to measure and grasp the efficiency of local social-distancing efforts.

"Data can be one of society's most powerful weapons in this public health war," Thomas Walle, co-founder and CEO of Unacast, says in an April 16 release.

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This article originally ran on CultureMap.

Texas startup’s at-home COVID-19 test finally approved by feds

CORONAVIRUS RESPONSE

After its earlier effort was tripped up, Austin-based startup Everlywell on May 16 finally gained approval from the U.S. Food and Drug Administration to launch its at-home coronavirus test.

In a May 18 release, Everlywell says the self-administered test will be available later this month. The company, which specializes in at-home tests for an array of conditions, is the first to receive approval from the FDA for an at-home coronavirus test that's not associated with a lab or a manufacturer of diagnostic products.

The FDA's emergency authorization allows Everlywell to work with a number of certified labs that process authorized tests, rather than just a single lab.

"The authorization of a COVID-19 at-home collection kit that can be used with multiple tests at multiple labs not only provides increased patient access to tests, but also protects others from potential exposure," Dr. Jeffrey Shuren, director of the FDA's Center for Devices and Radiological Health, says in a release.

Everlywell's at­-home test determines the presence or absence of the novel coronavirus, which causes COVID­-19 illness. Everlywell's test kit uses a short nasal swab and includes:

  • A digital screening questionnaire reviewed by a healthcare provider.
  • Instructions on how to ship the test sample to a lab.
  • Digital results within 48 hours of the sample being received by the lab.
  • Results reviewed by an independent physician.

Anyone who tests positive test will receive a telehealth consultation. All positive test results are reported to federal and local public health agencies when mandated.

On March 23, Everlywell was supposed to start shipping 30,000 coronavirus test kits to U.S. consumers. But before a single test was sent, the FDA blocked distribution of at-home, self-administered tests from Everlywell and other companies. After that, Everlywell pivoted to supplying coronavirus tests to health care providers and organizations.

As with the company's previously approved coronavirus test, Everlywell says its test for individuals is sold at no profit. The $109 price covers costs such as overnight shipping to a lab, lab-processing fees, and kit components. Some health insurers cover coronavirus tests.

Everlywell says it's working with members of Congress to enable companies that are neither healthcare providers nor labs to be directly reimbursed by health insurers. The startup also is exploring how its coronavirus test could be made available for free.

"Widespread access to convenient testing will play a crucial role in the country's ability to address the pandemic and prevent overburdening our healthcare facilities. As the national leader in connecting people with high­-quality laboratory testing, we are committed to fighting the spread of this virus in America," Julia Cheek, founder and CEO of Everlywell, says in the Everlywell release.

The company continues to supply its coronavirus tests to qualified healthcare organizations and government agencies.

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This article originally ran on CultureMap.

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