The Recovery Will Begin When Businesses Start Promoting

As an office-leasing agent, I am constantly asked two questions. First, when do I feel the recovery will begin; and second, the high office vacancy cannot be entirely blamed on the dot.com collapse, could it? I am certainly not an economist but I do see first hand trends in businesses that either are expanding or retracting and why.

During the near bankruptcy in New York City in the early 80’s, there was a local retail storeowner specializing in shoes, who decided to triple his advertising budget in the face of major cutbacks in advertising from much larger retailers. His competition thought he was “mad” to advertise in a “dying” economic cycle. The results surprised everyone, within six months this storeowner saw sales jump 400%.

I have never understood why advertising, marketing and public relations are the first items that businesses cut out during recessionary times. These three budget items should not only be left alone, but serious consideration should be taken to increase expenditures in rough times.

I believe that a true recovery leading to office space vacancy reductions will begin when businesses begin to advertise and market themselves once again. It is true that the dot.com collapse was not the only business that has lead to high vacancies in office space. Our advertising, marketing and public relations businesses that were forced to shrink or close up all together, probably created more office vacancy than the dot.com collapse.

There is only two ways to get out of a recession, we either need to innovate our way out or spend our way out. With little capital investment dollars available for technology, traditional businesses are going to have to “wake up” and realize that they are going to have to aggressively promote their products through increases in their advertising budgets

While commercial real estate firms continue to figure out how to survive through further consolidation, Starboard TCN closed 27 deals in March, its largest total in over two years. It also beat the average city square footage transaction of 2,800 square feet with an average deal size of 3,500.

This increase in business was due to Starboard’s commitment to increase its advertising budget. Since September of last year, Starboard has increased the number of web sites from 15 to 20 it supports online. It has increased direct mailings, postcard advertising and email advertising 200% during their same time period. The result is increased sales in the face of a continued downward office leasing cycle.

Brad Lampley, owner of JBL Real Estate and 539 Bryant Street, recently signed a lease with Ultra 16, a New York based advertising agency that recently opened its new San Francisco office at 539 Bryant Street. Brad has always been successful leasing his building to advertising and designed oriented businesses. He believes that when this recovery begins, buildings such as his that offer high ceilings and great light will be the first office spaces to lease. “People want to feel good when they walk into their offices everyday to work”.

The psychic of people and businesses is all based on how they feel. They make decisions based on these feelings. Promoting your business in a down market is the only way to have a chance to survive. Recovery of our office market depends on it.