Those of us in the business of renting commercial space know that every major holiday is preceded by a slowdown in new leases. Business owners and managers have the added workload of planning how to get the family to the in-laws for the 4th of July, renting a lake house for Memorial Day, and where they’re going to pop the cork on New Year's Eve. Renting commercial real estate can have a tendency to get lost in the shuffle and moved down the priorities list. Even if a tenant is the type that just does the staycation thing, the fact is people start checking out a week or two before any federal holiday and this “out-to-lunchness” tends to have a ripple effect on CRE transactions.
The net result for us at Digsy is that our conversion rates make a non-trivial drop. This means that our cost to acquire a customer increases. Not only that, the prospective tenants and buyers we do get are much less likely to bear fruit. This makes sense too, when you think about it. On one hand it’s harder to commit to closing a lease on a space when there’s a broad general slowing of inertia. On the other hand, the best tenants – those most likely to be truly willing and able to seal the deal – run successful businesses and generally have the disposable income to take a holiday trip. That means they are not around to make progress on their renting commercial real estate initiatives.
With the “why” pre-holidays is a good time for renting commercial space explained, the question that comes up is what to do about it. I bumped into an interesting article about this very subject written by Jeremy Neuer SVP of CBRE New Jersey. Jeremy advocates, with the aid of lyrics from Billy Joel’s Vienna:
“Slow down you crazy child
Take the phone off the hook and disappear for a while
I think Billy Joel and Jeremy make solid case for putting a little weight on the personal life side of the scale, but I think there’s a counter point to be made here as well. The week after major holidays, after all of the hangovers have been cured and diets have been resumed, usually sees a big pop in businesses renting commercial space. They pick back up their expansion and relocation plans and hit the internet and start searching again. They call their tenant rep agent ready to hit the ground running. That’s great, but so is every other business and their cousin too.
I’m a contrarian by nature and to me the dip in the market prior to holidays spells BIG opportunity. Tenants have the pick of the litter during the holidays. So you can take HUGE advantage of this if you’re a tenant. After the holidays, renting commercial space is a lot like 6am on Black Friday at a Walmart with $200 57-inch flat screen TVs — except the TVs are all full price.
I’m not a fan of either giving or receiving unsolicited advice, but here’s my approach to the pre-holiday slump as far as it impacts renting commercial space. Tenants and commercial real estate agent tenant reps should make the case for closing deals before the best spaces are picked the week prior to any major holidays. Work hard, close the deals that can be closed, then set your email out-of-office reminder and unplug. Work hard then holiday hard; life’s too short for half measures.
Enjoy your time off, and much success in renting commercial space!
By: Charlie Muir
Growth Specialist | Digsy
About the Author: Charlie Muir is a UCSD alum and resident Growth Hacker at commercial real estate tech startup Digsy. He was formerly a growth specialist at LawnLove; a Summer 2014 Y Combinator company.