Equity West Investment Partners on Thursday handed over about $9,000 to the 175 commercial real-estate brokers who showed up at the open house for its remodeled office building at 303 E. 17th Ave.
It’s an investment Equity West owner Steve Schwab said was well worth it. The company bought the building last summer and spent more than $1 million remodeling it.
“I would say as a result of having this affair, we probably have 10 to 12 potential tenant opportunities that weren’t aware of the building before, and we’ll have a shot to get those deals now,” he said.
The slowing economy has created a challenging environment for real-estate deals, so landlords are rolling out aggressive incentives to brokers who can bring tenants. The vacancy rate for the metro-area office market was 15.8 percent in the third quarter, up from 14.7 percent in the first quarter, according to a report from Grubb & Ellis.
The promise of a free lunch and $50 cash has brokers showing up at open houses in droves. The building owner foots the bill, and the open house is generally run by the listing agent.
Tuesday, when snow blanketed the metro area, Frederick Ross Co. brokers Tom Lee and Jane Rubley gave $4,450 to the 89 brokers who toured the suites they’re leasing in Glendale.
“If you even get one deal out of it, it’s worth it,” Rubley said.
Lee said landlords benefit from the exposure of drawing a lot of brokers to an open house.
“If you want a significant turnout, you better do it because brokers are kind of spoiled now,” he said.
Some landlords are offering incentives such as trips or shopping sprees in exchange for signed leases. Others are increasing commissions.
Sam DePizzol, senior vice president at CB Rich ard Ellis, said it would be unethical for a broker to steer a client to a building offering such an incentive.
“You always have to act and do what’s in your client’s best interest, regardless of the fee structure,” he said. “And you have to disclose it to your client.”
Recent open houses that offered a $50 cash incentive for showing up were held at Colorado Plaza Towers by Cushman & Wakefield and Denver Centerpoint II by CB Richard Ellis.
Colliers Bennett & Kahnweiler Inc. offered $100 to brokers who brought clients to tour the I-225 Business Park. And for any lease signed before the end of the year, the broker will get a gift card worth 50 cents for every foot leased.
Alberta Development will give brokers who bring in a signed office lease at its Southlands development a $1,000 gift card for stores at the project.
Brokers bringing a tenant to Horizon Terrace have the opportunity to win a trip to one of four Four Seasons luxury resorts.
But incentives are not as out of control as they were during the real-estate downturn in the 1980s, said Stockton Baker, senior vice president at Fuller Real Estate.
“If you leased a floor, they gave you a car,” Baker said of Union Tower developer Loup-Miller Cos. “That was on top of regular commissions. The market was so dead; they were so desperate to lease space.”
