If we as a business community are going to fully emerge from the shadow of the worst economic downturn since the Great Depression, we need to think differently about how we conduct business on a fundamental level. Specifically, with regard to commercial real estate, I believe property owners need to be realistic about their property, consult the advice of specialists on how to position their product and offer a higher level of service to potential tenants.
I am a firm believer in collaboration between the building owner, property management and the commercial real estate agent. When people from different business disciplines come together with passion and motivation to achieve a common objective, amazing things can happen.
Take, for instance, an office building in Boise. This building had been owned by its current owners, Bob and Ken Dreyer, for nine years. In the wake of the economic nosedive, the building suffered some deep vacancy rates – to the tune of 15,000 square feet as recently as 2012.
The building languished for some time with about a 60 percent vacancy rate. In order to pull the building out from its depressed state, Dreyer knew he had to think, act and work differently.
Having owned and managed commercial real estate in the past, he had all of the knowledge and experience he needed, but he also knew that he had to approach the future differently, get creative and bring in other professionals to work with. To start, he changed commercial real estate brokerage firms and consulted with us on what the market rents should be for the building. The goal was to breathe new life into the property and transform the building into a structure that can’t help but attract and provide a new office space for several companies. His team consisted of a property management company, a commercial brokerage, a designer and his brother Ken, who is co-owner in the building.
He began with the outside, by painting the exterior and adding some new, visually appealing signage to the property. That was a necessary start, but it was on the inside that the really innovative changes took place.
For the first new tenant to come on board, Dreyer paid for the interior designer to consult with the company to bring about a perfect space for their company. They started with a walkthrough and discussed options. Dreyer was willing to make upgrades beyond the norm of throwing down some new carpets and splashing some new paint on the walls. He had the tenants consult with the interior designer on the vision for what would work, and then the property management team worked with contractors to bring about renovations that included high-end features such as tearing out wall sections to give the space a more open feel, marble countertops and new architectural elements such as an arched doorway. The deal he struck with the tenant included amortizing the costs into the rent, which ended up giving them a beautiful new office space at competitive market rates. He was willing to work hand-in-hand with everyone along the way to ensure the new tenants had all their needs met. This suite in turn became somewhat of a model showroom for future prospective tenants.
This collaborative approach was replicated with every new tenant who walked in the door. Many were pleasantly surprised that they had access to interior designers who would help them create a perfect space. As a result, there have been more than 14 new leases signed in the last year and a half. The two most recent tenants to the building, a software firm and a counseling company, have fully renovated suites that are unique and not only fit their style, but also the function of their businesses.
With his willingness to take a different approach and look at not just what the tenant wants today, but also what will benefit the building in the long run, Dreyer, with the help of the professional team he assembled, turned a hard-to-rent property into a building well on its way to full capacity.