Show some downtown office space. Get an iPod.
Land a tenant for some retail space in Liberty Lake. Drive away in a BMW.
Some landlords are ponying up perquisites, trying to fill vacant spaces by offering toys to commercial real estate agents who bring tenants to their properties.
We want to fill the space faster and see even more excitement than weve already seen, says Chris Bell, a real estate agent with Tomlinson Black Commercial Inc., of Spokane. Its amazing what kind of attention this will get you.
Agents here say the promotions featuring cars and electronics are a new take on an old idea of offering incentives to agentsand in some cases, new tenantsto lure them into vacant space. In the past, they say, landlords trying to fill space quickly have offered bonus commissions to agents or reduced rents to tenants. Sometimes, landlords have offered trips to places like Hawaii and Las Vegas to agents whose clients take space in their buildings.
In the past, bonus commissions and rent reductions have occurred more typically in a soft real estate market, but agents here say that the current extra-incentive activity doesnt appear to be a sign of weakness in the market.
People are just being a little more creativea little more aggressive, says Dan Cantu, owner of Cantu Commercial Properties LLC, of Spokane Valley.
Craig Soehren, a real estate agent at Kiemle & Hagood Co., is marketing vacant space in the Bank of America Financial Center, at 601 W. Riverside in downtown Spokane, and says that building is about 85 percent occupied now.
He says the owner of that 20-story tower is offering iPods to agents who show available office space to prospective tenants that are looking for more than 3,500 square feet of floor space. Agents who represent tenants that lease more than 4,500 square feet of floor space will receive a plasma-screen television.
The landlord has doled out a few iPods so far, but hasnt parted with any television sets yet, Soehren says.
In Liberty Lake, the company thats developing the Home Depot-anchored Village at Liberty Lake retail complex is offering to pay a two-year lease on a BMW 3 Series car for an agent. To get the leased car, Bell says, an agent must deliver a tenant who leases 5,000 square feet of floor space or more in a 10,000-square-foot retail building there.
The incentive is quite an additional perk, Bell says. On a five-year deal for 5,000 square feet of space in that retail center, a tenants agent would earn a $16,000 commission, he says. The BMW lease carries a cash value about $15,000, which essentially would double an agents compensation from a property lease.
WRI/LLA Ventures, a joint venture of major out-of-state developers, is developing the Liberty Lake complex. Bell says the BMW promotion was inspired by a promotion one of the partners in WRI/LLA offered in San Francisco, where tenants agents received a leased Porsche when a deal was inked.
Bell says the level of activity at the Liberty Lake retail building has been healthy, but hasnt resulted in many transactions.
This is another way to try to get people in the door, he says.
Some real estate agents say they already use or would use such incentives to create a buzz about a property theyre trying to lease out, and that such promotions keep a property fresh in an agents mind. Still, some say they arent convinced that such incentives fill space faster than it would be filled otherwise.
The effectiveness of the method is not what you would expect, Soehren says.
Weve given away a few of them (iPods), he says. Would they have shown the space anyway? Probably, but you dont know.
Cantu says he received one of the iPods for showing a client office space in the Bank of America building downtown, but wasnt aware of the promotion until he was at the showing. Of course, he says, he would have shown his client that space regardless.
Cantu owns a few buildings himself in the Spokane area. As a building owner, hed consider using such a promotion if he were having trouble filling space, he says. When representing a potential tenant, however, an agent has to monitor his motivations closely when such a benefit is involved, Cantu says.
We, as brokers, have to be a little careful that we arent trying to push a building onto a tenant, Cantu says. Then, you arent thinking about your tenant; youre thinking about yourself.
Bell, Cantu, and Soehren all say agents should tell their clients when they are receiving additional compensation while working on their clients behalf.
While the car and electronics incentives havent been seen much in the Spokane market, those types of incentives apparently arent indicators of a softening overall market, agents here say, though some parts of town are seeing the amount of available space increase.
A vacancy survey completed earlier this summer by the Spokane-based Auble Jolicoeur & Gentry real estate appraisal firm shows an overall office vacancy rate in downtown Spokane of 15.7 percent as of February 2006. While that number doesnt suggest a tight office market by any means, its an improvement compared with the downtown office vacancy rate of 21.8 percent a year earlier.
Office vacancies rose slightly on the downtown periphery and in Spokane Valley in the survey, and somewhat more substantially on the North Side and on the South Hill. In the retail market, the Auble Jolicoeur & Gentry study shows vacancy rates declining downtown and on the North Side, but rising on the South Hill and in the Valley.
Contact Linn Parish at (509) 344-1266 or via e-mail at firstname.lastname@example.org.
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