Article by Sheila Muto
Office buildings may be immovable objects, but increasingly these days, their addresses aren't.
Rising vacancy rates and falling rents are prompting many landlords to give their properties a makeover to appeal to more -- or better -- tenants. And a simple address change can do a lot to change the image or bring a certain cachet to a property. Some owners of buildings residing on corners are opting to take on the names of the cross streets if they're more desirable. Buildings with back entrances leading to more-prominent streets are switching to those names. Other properties have the ability to choose or change street numbers that will be more pleasing to tenants.
Real-estate owners "are trying to give their property a new set of clothes and create some value in this market cycle," says David Dale-Johnson, director of the real-estate program at the University of Southern California in Los Angeles.
Adds Peter Turchin, a managing director at Insignia/ESG Inc., a New York real-estate services firm: "During the last three years when the market was hot, it didn't matter what you did to a building because you could lease it with no problem. Now that there's more competition in the market" for tenants, landlords "want to make changes to their buildings" to attract them.
In New York, 340 Madison Ave. is much more memorable than 342 Madison Ave. In Washington, D.C., a Pennsylvania Avenue address and its association with one of the best-known residences in the country offers more prestige than an H Street designation. For an office building in West Hollywood, Calif., a San Vicente Boulevard address provides a preferable image to one on Melrose Avenue.
In San Francisco -- where the address-changing trend is among the most pronounced -- an address on the relatively unfamiliar Front Street may be more appealing than one associated with scruffy Market Street. In the city's badly battered South of Market area, a modest 15,000-square-foot, two-story office building last year traded in its 651 Howard St. address for one on its cross street, 10 Hawthorne Lane.
"The Hawthorne Lane address is more prestigious than the Howard address," primarily due to the popularity of an upscale restaurant called Hawthorne Lane, says Daniel Huntsman, president of Huntsman Architectural Group in San Francisco, which renovated the still-vacant building.
Meade Boutwell, a senior vice president in San Francisco at New York-based real-estate services firm Cushman & Wakefield Inc., also has discovered the power of the right address. A few years ago, he was struggling to lease a building at 444 Market St. in the city's financial district for its owner, Atlanta-based Lend Lease Real Estate Investments Inc. "I felt we were a better building than the [Market Street] address suggested, and that we should be able to compete better with other office buildings" in the financial district, he says. "Even my own company wouldn't go to Market Street," he adds. "It just doesn't have the cachet."
Mr. Boutwell nearly lost a leasing deal at one point with the San Francisco office of architecture firm Skidmore, Owings & Merrill LLP, which had designed the building in the late 1970s. Three of SOM's four San Francisco-based partners gave the deal a green light. But the remaining partner "refused to move into the space if we were to do the deal," recalls Gene Schnair, the managing partner of the office. The dissident colleague -- a native of China -- "told me that the Chinese word for 'four' is a homophone for the word 'death,' so '444' was 'triple death,"' says Mr. Schnair. "That's very bad feng shui. I asked her what we could do about it, and she said, 'Change the address.' She said one, three or eight would be good numbers."
Two months ago, the 36-story office tower on the northwest corner of Market and Front streets in San Francisco unveiled a new look and location: The lobby received a $2.5 million face lift and its address changed to One Front St. from 444 Market St. The architecture firm eventually moved in and used the One Front St. address on its letterhead. The objecting partner used the back entrance on One Front St. And last month, Washington, D.C., law firm Covington & Burling signed a lease taking the top four floors.
"It's all about image and perception," says Mr. Boutwell.
In Manhattan, a Times Square address carries pizzazz among financial-services and law firms. Given that, a 20-story, 350,000-square-foot showroom building at 1466 Broadway, which is being converted to office space, will re-emerge after the renovation later this year as Six Times Square, says Mr. Turchin of Insignia/ESG, who is helping the owner reposition the building to attract law and accounting firms. "Broadway is associated more with fashion," he says. "By changing the address, we change our association in the minds of tenants."
Still, one Beverly Hills, Calif.-based building owner gave up a well-known address for a lesser-known cross street. Last year, Clarity Realty Partners LLC purchased a 108,452-square-foot office building at 9333 Wilshire Blvd. in Beverly Hills. About a month after acquiring the property, Clarity decided to change the address of the building to 100 North Crescent Dr., much to the surprise of some.
"I was amazed they got rid of the Wilshire Boulevard address," which is recognized and associated with office properties, says Neil Resnick, a senior vice president for real-estate services firm Grubb & Ellis Inc., who has helped entertainment firms secure space at the building. Crescent Drive, he adds, "is more associated with retail properties."
But Clarity's Bruce Rothman says the new address helps "distinguish" that the building is in Beverly Hills. With a Wilshire Boulevard address, he explains, "'Where on Wilshire?' was always the question people asked," since it stretches more than 16 miles. Crescent Drive -- like Rodeo Drive -- he adds, is a "recognizable" Beverly Hills street.