A client asked me the other day, “What’s with all the ‘for lease’ signs around town? I thought it was a good market? Shouldn’t all of these signs be gone by now?”
As I thought about that, I wondered about what makes a market a ‘good’ market. Is the Treasure Valley commercial market a good market?
Well, for owners of commercial property it’s a good market. For builders and developers it’s a good market. It’s definitely a good market for real estate brokers. But for my clients, it’s a tough market. It’s a tight market. My clients are commercial tenants, the occupiers of space, and they are faced with few choices, dropping incentives and rising rents, among other things. This market requires they be proactive, creative and quick to act, traits that can be hard to come by when your day-to-day work involves running a business. After all, a typical company only experiences a real estate need once every 5 to 10 years or so. So I guess the market status depends upon your perspective.
But, back to the question about signs. Yes, there do seem to be just as many ‘For Lease’ or ‘Available!’ signs as always. Yet, we can’t deny that vacancies are down. Just read any of the commercial real estate data put out by the big three landlord/management firms. We are seeing historical occupancy levels and spaces that have been vacant since the last good market are finally leasing. And still signs continue to blanket the landscape.
I think part of the answer is that signs are great marketing tools. They are lead magnets for the agents that put them up. You’ve probably noticed banks, architects and contractors putting up signs on project sites. Is there something to this? I had coffee recently with a VP of a company that provides vendor services to contractors and developers and he told me that putting a sign up on a job site was the best marketing move he ever made. Everyone commented on the fact that they were doing so much work and seemed to be the go-to company for this particular service. And everyone knows that the real estate agent/company with the most signs is the best agent/company, right?
So, is that it? Are signs both marketing and branding tools? And if this is true, are people leaving signs up well after the project is complete as a lead magnet? No, I don’t think so. We have a very respectable business community here and while it may take a couple of weeks for a sign to come down, nobody wants an outdated sign on their property if it’s fully leased and occupied.
Well then, is it just a perception, this idea that there are more and more ‘for lease’ signs popping up everywhere despite a tight market? I don’t think so. Staff at Boise’s planning and development services are busier than ever. I hear the same from Meridian and Eagle. While vacancy rates have dropped, more and more projects are coming out of the ground. Could it be we have more projects going vertical, more ‘opportunities’ out there to market, than ever before and therefore more visible efforts to promote these projects? Derrick O’Neil down at Boise City tells me, in round numbers, that they have 40 projects worth nearly $800,000,000 either in design or under construction. That is a lot of projects and what have we learned about marketing around a project? That a thriving market means lots of signs! Let’s hope this continues!!
Greg Gaddis is a principal with Tenant Realty Advisors. His company does not own any signs.