The big sexy ones…

I was at an industry function last week that was attended by every broker of note in Northern New Jersey. There was much talk and congratulations between brokers about the big deals they had closed this year. There was a lot of talk about “how long was that lease term?” and “how many square feet?”  These were all stories about “big game” and even bigger commissions.

As I listened to these stories, I wondered who was doing the small deals for these same clients. Nobody talked about the sales office that same client opened in a small Midwestern city or the short-term renewal they pulled together at the last minute.

Companies with multiple locations have many more small locations for each of the large facilities that these brokers were discussing. Were these brokers servicing those projects with the same enthusiasm? Were the clients just as happy with the outcome of a short-term renewal in Des Moines as they had been with their ten-year headquarters lease in New Jersey?

Are tenants demanding the same level of attention from their brokers for each deal, irrespective of size? Or are they letting brokers off the hook for low profile deals? Everyone (both brokers and clients) loves doing the big sexy ones… But the true measure of a broker is whether he’s willing to roll his sleeves up and do the dirty work on the small ones.

What does dry cleaning have to do with vacancy rates?

I saw a study from Rutgers Business School called the “Dry Cleaner Index” which correlates dry cleaning receipts to New Jersey economic trends. The idea is that an increase in dry cleaning receipts indicates an uptick in hiring and an expanding state economy. Their data shows a macroeconomic expansion for the state.

This should also be a great leading indicator for the condition of the corporate real estate market in New Jersey. While interest rates, capitalization rates, and sales investment sales volume are frequently pointed to as corporate real estate activity, what really drives the market are butts in seats. Companies that are in hiring mode right now are going to need space to accommodate all those new hires.

Vacancy rates and employment move in an inverse lock-step. As hiring increases, vacancy rates will slowly come down. New Jersey’s lackluster corporate real estate market should start to improve, continuing to build on the high-demand markets that have already seen an uptick in activity.