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Office ads: price only one part of the story.

Office ads: Price only one part of the story

When you read an ad for available office space, you can learn about the location, the owner of the building, the building installations and a whole host of other juicy tidbits, but what about the price tag? In most cases, what the ad won't tell a prospective tenant is how much per square foot the owner is asking?

"I don't think it's good marketing," said Leon Manoff, senior director, Williams Real Estate. "There's a whole host of other issues than come into play in a real estate transaction."

Manoff, in a recent ad for sublease space on Manhattan's Park Avenue South, excluded per square foot price but included such items as "No operating escalations" and "Recently built space." According to this broker, including the price tag "cheapens" the product and may scare people away. Manoff said his agreement with the owner may prohibit him from listing a low per square foot price, but that doesn't mean, considering all the other elements in a lease, he can't do a "cheap deal."

It has never been customary to advertise by price, said Arthur Draznin, president of Harper-Lawrence, Inc. Price, he said, is usually just one consideration of a tenant. Location and view, for example, are also priorities. "Although price is important, it's not the only decision they have to make," he said.

If you advertise a poor quality space by price, Draznin added, the likelihood is you won't rent it any sooner.

Advertising by price, said Henry Goldfarb, of Bernstein Sales & Leasing Corp., is unprofessional, creates an atmosphere similar to an auto market and leaves open the possibility for "bait and switch."

Two-thousand square feet in one building can be very different in another," said Goldfarb. "There are the issues of loss factor and ownership. "You can't compare apples to apples."

As exclusive agents for a building in Midtown South, Goldfarb said, he advised the client not to use price in the ads because he thought it compromised their reputation, which he believes is an important reason for renting in that building. In addition, to featuring "modern installations", and "unique penthouse with skylights and wooden terrace", the ad for the space includes the owner's name.

One Manhattan advertising executive, who asked to remain anonymous said, said they advise clients not to use price, for a number of reasons. First, she said, there are so many different variables that go into the price of a space -- direct operating or non-direct operating, tenant workletter, etc. In addition, the New York Times, for example, is available anywhere in the country, and price per square foot may be misleading to someone that doesn't know the different streets and neighborhoods. The confusing ads may paint an incorrect picture of the market for outsiders.

In the case of direct marketing pieces, she said, there is more room to better explain the particulars of the space. So strongly do area brokers feel about this and other advertising issues, that codes of conduct on display advertising are outlined in a separate chapter in the Real Estate Board of New York's constitution.

The constitution prohibits the practice "of offering rental space at price per square foot" in newspapers, periodicals, brochures, listings, rental schedules, hand distributed circulars and circularized mail matter."

According to the constitution, price or rate per square foot in ads can be misleading because the advertised space may not be comparable to space in the same location. The document also speaks of "bait" advertising and says a tenant may be led to believe that the price is an average or, the maximum rental of the building. The space may, in fact, it states be in an undesirable location and the tenant may then be persuaded to take a higher priced space.

Michael Slattery, of the Real Estate Board's research department, said this code may apply to commercial leasing ads and not residential sales because with homes and apartments "the price per unit is the per unit." With commercial space there are many other factors, such as work letter, concessions, pass-alongs, etc.

"Price in (office space) is simply not do I get it at $30 per square foot or $25 per square foot," he said.

Meanwhile, some brokers believe that market conditions make it such that they believe a low square foot price is something to shout about.

Warehouse Square Associates, as co-general partners, have been advertising $4 per square foot warehouse space in Tribeca. A spokesperson for the company cited "marketing" as the reason for doing the unusual in their ad. "It's just that simple," she said. "It's an interesting way to approach it. (We saw) not a lot of people were listing price."

Carol Management of New York is also using price per square foot for a property in downtown Stamford. "In a very competitive market for commercial space," said Mary Sheller of Carol Management, we thought that we were offering such an excellent price."

Sheller said she does sometimes advocate leaving out price. "Leaving out something as pertinent as price might be an inducement for someone to call and inquire especially if they recognize the building or the area," she said.

In both Warehouse Square and Carol Management's ads, the addresses of the buildings were ommitted.
COPYRIGHT 1991 Hagedorn Publication
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:office space ads
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Jul 10, 1991
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