Whenever I see a frog, I can’t help but smile. Frogs are considered to be “nature’s litmus,” a test of a healthy, well-balanced ecosystem. Sitting right in the middle of the food chain, frogs are quite sensitive to the environment and can see immediately when things are out of whack.
Property management professionals are in a somewhat similar although less soggy position when it comes to the economic environment. And from my commercial property management perspective, the Idaho business ecosystem is starting to get back into high gear.
When the real estate market was in the thick of the downturn, many businesses, large and small, all along the “food chain” were affected. While some slowed down and went on the endangered species list, sadly, others went extinct.
Let’s consider why this happened. In the downturn, we saw an environment with high vacancies, and space was not moving. The building owners became skittish and held back on making renovations or upgrades to their properties. Now, understand that for most, it was not a choice they wanted to make; many landlords were underwater on a lot of properties. They simply could not afford to make the investments when their incomes had taken such a hit from the high vacancies.
When owners don’t make renovations, the carpet, paint, furniture, HVAC, tile, roofing, landscaping and many other industries slow down as well. People involved in these businesses don’t go out to eat as much, or hold off on that new jacket, TV or new car. This spreads out into other segments of the economy, which start to cool off as well, and the trouble spreads.
Today, we can read in the news that after years of wading through deep waters, the economy is improving. But it’s one thing to hear about it, and another to actually witness it. Property managers work and contract with hundreds of different types of vendors, from parking lot pavers to florists, and we are definitely seeing upswing in activity.
Idaho companies are starting to crawl out of their basements and garages to find actual office space for their growing businesses to lease. This is encouraging owners to start making more capital improvements and begin renovations. That improves the value of the property, making investors who are purchasing the buildings more willing to invest.
Property managers and building owners usually meet annually to discuss budgets for the coming year. Owners are beginning to loosen their purse strings now that vacancy rates are dropping. They know that if a space is updated and upgraded with some new carpet and paint, its rent rates can go up from $2 to $5 per square foot.
With owners allocating more money toward improvements, the painters have more work, the carpet manufacturers and retailers are selling more products, the drywall companies are hiring more workers, and unemployment goes down as the Idaho economy begins to grow.
Property managers know the buildings and grounds better than most owners. They have a finger on the pulse of the market and, like a frog in a pond, have a unique vantage point to understand the health of an environment. From this perspective, I get the sense that the Idaho economy is really starting to hop.
Tammy Cox leads the Idaho Property Management division of Cushman & Wakefield Commerce. She is responsible for commercial, retail and office properties throughout the market. She holds a Certified Property Manager designation from the Institute of Real Estate Management and is an affiliate of the National Association of Realtors. To reach her, visit comre.com or email Tammy.Cox@comre.com.