Office Signage is Free Advertising: What You Need to Know

Today, branding is everything.  Most companies want their brands everywhere, including at their office space.  Consequently, signage is an important deal term for many tenants and it is important in four ways: (1) the type; (2) the desirability of any signage at all; (3) the right to ensure that other tenants do not have signage that negatively impacts the original tenant; and (4) installation and maintenance cost.

WHERE DOES IT GO?

There are four main types of commercial office signage:

Directory: All tenants are usually given a listing in an electronic directory in the building lobby.  The only aspect of directory signage occasionally negotiated over is the right to additional directory lines, say for individual attorneys in a law firm or different divisions of a tenant company.

Suite: Again, all tenants are given signage identifying their own suites.  Subject to negotiation is whether the suite signage can include the tenant’s logo or instead needs to be in a building standard font.  Also, sometimes negotiated is directional signage from an elevator lobby when the tenant’s suite does not front that lobby.

Monument: Many buildings have a monument sign in front of the building, typically fronting the busiest street, where the building’s major tenants are listed.  This signage is a more difficult ask as monument space is limited.  If monument signage is secured by the tenant, the prominence on the sign should be addressed in the lease, i.e. will the tenant be placed at the top of the monument and, if the tenant is measurably the largest tenant, will it be entitled to a larger proportion of the monument.

Building: Many buildings offer some kind of signage on one or more of the building facades.  This can include “eyebrow” signage which is signage placed above the ground floor and typically reserved for first floor retail tenants.  It can also include signage placed at the top of one or more of the building’s façades.  Some municipalities limit the amount of building signage allowed to one or two signs per side, so this is a very limited — and therefore valuable — resource.  Usually, top of building signage is reserved for the largest tenant and often that tenant’s lease includes language stating that if the tenant’s occupancy falls below a certain level, it will lose the signage.

Size and exact location of monument and building signage should be addressed in the lease, ideally supplemented by an exhibit containing a rendering of the agreed upon signage.

ASSET OR LIABILITY?

Although most businesses/tenants want as much signage, and therefore visibility, as they can get, we have worked with numerous tenants who want as a little and as low-key signage as possible.  For instance, retail brands typically avoid signage on their office spaces as they do not want to create customer confusion thinking the sign indicates a retail location.   They may very much, however, care about the next point…

DO WE HAVE TO SHARE?

Banks and law firms are the best example to illustrate this point.  I have found that banks typically do not like to occupy space (retail or office) in buildings prominently featuring their competitors’ signage.  When we conduct initial surveys to identify building options for a tenant, we are often instructed to eliminate any buildings already named after a competitor.  Similarly, if a bank or law firm leases space insufficient in size to warrant their own monument or building signage, we will often negotiate for language stating that, during the term of that tenant’s lease, the building cannot be named for a competitor of the tenant.

The concern in these cases is that the tenant’s customers will be confused as to whether the tenant actually occupies space in the building.  Also of concern is the perception that the tenant is dwarfed in size by their competitor as evidenced by the initial tenant’s lack of signage.

The remedy for a violation of exclusivity language is typically the right to cancel the lease.  With this remedy, the building owner reserves the right to lose the smaller tenant to gain a larger tenant and the initial tenant reserves the right to move out of the building.

Exclusivity language in a lease should specifically address which competitors or types of competitors are precluded from having signage, whether there will be a minimum square footage required on the part of the initial tenant to maintain this exclusivity right, and what the remedies are for violations of that right.

WHO PAYS THE BILLS?

Any signage discussion should also include costs of signage.  Usually the building landlord will provide suite and directory signage as part of the initial tenant buildout.  Monument signage is typically a tenant cost; however, landlords will be responsible for maintaining the monument sign.  Whether or not the monument will be lit at night should be addressed in the lease as well because adding lights after the sign is installed can become a big expense.

Building signage costs are nuanced and tricky.  Initial size, location and installation costs should be addressed in lease negotiations and memorialized in the lease.  I once negotiated signage on behalf of a bank for an under-construction multi-tenant office building.  My client and I will be forever indebted to a careful architect who asked us to be sure the client’s building sign would be lighted and that the initial building construction documents provided for the delivery of electricity to the sign.  This also prompted a discussion of which entity would pay for the electricity costs (the tenant) and which entity would pay for and maintain the sign (again, the tenant because the tenant wanted control).

BOTTOM LINE

Know whether you need signage, how much is justified based on your size, what it’s going to look like and who is going to pay for it.  And hire a good broker to help you get all of this in the lease.  If you need a recommendation, I happen to know a couple…