The Trio Behind Smart Property Choices
According to the Pew Research Center, crime rates in the U.S. fell significantly between 1993 and 2022. Initial reports from other organizations suggest that the rates have continued to fall. Yet crime persists. As World Population Review states, “Crime is alive and well in the United States.” And this means that crime remains a factor in that all-important consideration of “location, location, location,” which underpins decisions about real estate purchasing, development, and leasing. Several SIORs told SIOR Report how they help their clients think about and address this critical component of risk management.
Assessments
Successful brokers stay up-to-date on crime rates in different submarkets so that their expert guidance incorporates local knowledge. Staying updated involves far more than viewing reports. “Crime statistics tend to be stale,” says Street Jones, SIOR, principal of Rich Commercial Realty (RCR) in Raleigh, N.C., who attests that the best information comes from occupiers in specific submarkets. When RCR conducts its regular check-ins with clients to see how business is going and how a space is functioning, the clients provide “reliable intel” on crime issues. RCR is then able to relay this intel to other clients in the area or those who are exploring possibilities in the same submarket.
Impacts
Jones notes that crime and safety have become major issues for office users in urban downtowns, and reports that in Raleigh-Durham, concerned companies are exiting their downtown spaces or crossing downtowns off their lists of potential locations. Such trends do not surprise Melissa Alexander, SIOR, principal at Foundry Commercial in Nashville. “In a city, you’re going to expect some sort of crime if you’re closer to a general city population,” she says.
Some cities, of course, are safer than others. But even in safer cities, tabulation processes, headlines, and social media can have an “outsized effect on the way both companies and individuals perceive crime in a community,” warns Brian Bandell, real estate editor of the South Florida Business Journal, in a recent article. He adds that perception may not match reality in some cases, but that “it still shapes decisions.” To address any inaccurate perceptions, brokers who specialize in urban markets should arm themselves with verifiable data in addition to their in-depth knowledge of submarkets.
To address any inaccurate perceptions, brokers who specialize in urban markets should arm themselves with verifiable data in addition to their in-depth knowledge of submarkets.
Prevention
Fortunately, there are many steps commercial landlords and occupiers can take to prevent crime on the properties they own or occupy. Arlon Brown, SIOR, director-brokerage at NAI/Parsons Commercial Group in Boston, is both a broker and a landlord. He points to two common measures employed in certain areas: a guard or gate for vehicles, and roving security.
Jones finds that some industrial occupants choose higher crime areas because of cheaper costs of space, but that they protect themselves with the measures Brown mentions as well as with monitored security cameras and LED wall packs or poles that add light to the property.
Alexander, who specializes in industrial properties, says that fencing, in particular, has risen in popularity. She welcomes opportunities to weigh in on site plans for new development product so that plans take fencing into account. For example, developers may wish to maximize a site footprint with a shared truck court. But fencing around shared truck courts may block tenants from reaching dock doors. As an alternative, she often recommends a shared parking lot.
When Alexander works with clients considering leases at properties without fencing or other security measures, she often requests such accommodations from the landlord during the early stages of negotiations. In many cases the landlord will provide tenant improvement money that covers the costs of installations. Most landlords also understand that extra security enhances the value and appeal of a building.
Benefits of Prevention Measures
Beyond enhanced appeal and added value, prevention measures help landlords reduce their insurance costs and, in turn, keep their rental rates competitive. Furthermore, Brown points out that insurance usually protects landlords from liability if a crime occurs on a site that is well lit and in good repair.
Jones views vacancy as the biggest liability for landlords, whose reputation can be adversely affected by the incidence of crime on a property or inattention to safety precautions. As Jones observes: “If a landlord does not properly address issues as they arrive, word travels fast and a landlord could be left with a lot of empty space.”
Tenants, meanwhile, benefit from easier recruitment and retention of employees in locations perceived as safe. Alexander notes that the labor market got very tight during COVID-19, especially for companies in the industrial sector. Consequently, these companies are taking many steps to increase safety.
On the office side, employees can’t be as choosy as they were during “The Great Resignation” of 2021 and 2022, but there is still competition for top talent among employers. Those who have implemented return-to-office policies will likely experience less attrition if office locations are in safe areas.
Advisory
Again, the good news is that crime rates are falling in the U.S. But brokers and their clients should be on their guard against crimes that continue to plague commercial properties. Security Today[AF1] , for example, identifies specific types of commercial property crime that the publication expects to “escalate” soon. These include metal theft; vandalism, arson, and property damage; burglary and break-ins; cargo theft, especially for shipments of valuable goods such as pharmaceutical items, electronics, and luxury items; construction site theft of equipment, tools, and materials; and equipment and vehicle theft.
Following the recent fires in California and the floods along the East Coast, many commercial landlords, developers, and tenants are, understandably, focused on natural disasters. But they and the brokers who represent them should not neglect to consider the impact of crime on the viability of the properties they own, invest in, or occupy. To best advise landlords and tenants, brokers should be prepared to draw on not only their specialist knowledge of submarkets, but also to recommend precautions that landlords can adopt and tenants can request. This is a wise – and safe – approach.
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