Rethinking Leased Marketing in Industrial Real Estate
In industrial real estate, the traditional approach to marketing closed lease deals often revolves around total consideration—the cumulative rent over the lease term. While this metric indicates that a deal has closed and offers insight into revenue, we must ask: how effective is this strategy for marketing? What real value does it provide to landlords and investors?
Why Total Consideration?
Unlike selling properties, emphasizing total consideration in lease deals is like a meaningless checkbox rather than compelling marketing data. It informs interested parties that a lease has been secured and may hint at the agent's commission, but let’s be real. What insights does this data have to offer?
Lease deals are inherently unique. While historical data can inform decisions, it’s imperative to interpret it in light of the current market. After all, past performance isn’t always indicative of the future. So I’ve always wondered why are leased rates kept internally by brokerages and agents?
Competitive Advantage or Confidentiality Concerns?
Some agents hesitate to disclose lease comps, fearing that they may give competitors an edge as the lease is about to expire. Is this about competitive advantage? Or is this a confidentiality concern? For corporate leases, perhaps. However, the future is unpredictable—tenant or landlord plans can change, leases can be extended, and properties can change hands off-market. Is there a point to this?
The Importance of Visibility
Effective marketing drives better outcomes. Prices and rates are ultimately subject to the economic principles of supply and demand. In a situation where market data isn’t perfect, maximizing visibility is a potential solution to limited information. Leveraging digital marketing strategies, social media, and virtual tours in addition to traditional marketing channels to attract a broader audience makes having or not having lease comps less significant. Whether a price or rate is good or bad is all relative to a particular point in time. Imagine five buildings with similar characteristics vying for the same top-tier tenant. In that situation, using lease comps to justify the rent is irrelevant.
Moreover, the leased rate you see is just the surface of a much deeper conversation. Unlike sales, where parties can walk away and celebrate after the transaction, landlords and tenants are locked into a relationship for the lease term, even if they find each other disagreeable. The nuance of leasing is influenced by many factors—concessions, tenant improvements (TI), vacancy time, rent abatement, tenant financials, and more. Without understanding the details and the context behind these elements, the lease rate itself doesn’t tell the whole story.
Vacancy Time
An often-overlooked aspect of lease deals is the time it takes to secure a tenant. Vacancy time can significantly impact overall costs and should be part of any comprehensive analysis. By focusing on reducing vacancy time, we can create more efficient leasing processes and improve outcomes for our clients.
Conclusion
If the reason to keep lease comps private is solely about a broker's competitive advantage, it is misguided. I believe if I’ve done my job well, my clients will return. And if they choose another broker, I see it as an opportunity to reflect on their decision and identify areas for improvement.
Rather than worrying about another broker stepping in at the end of the lease, I choose to focus on delivering exceptional value through continuous learning and innovative solutions. After all, lease deals are more than just rates—they're about relationships, long-term commitments, and the evolving needs of landlords and tenants. Understanding the full scope of factors at play allows us to deliver better outcomes, even when the numbers alone don’t tell the full story.