Thursday, September 18, 2014   




Name of the game is signage rights

Danny Chung

Friday, June 23, 2006

For companies paying rent, being able to announce their presence in a building by securing naming or signage rights is an important part of doing business.

To be able to project their name far and wide signifies status to competitors and reassurance to their clients. And sometimes they cost nothing, perhaps the best form of advertising.

For some firms, having their name up there is a must, according to Paul Dwyer, chartered surveyor and property consultant at Dwyer & Co. "Tenants like it because of what it does. One, it's free advertising, but two, it gives a feeling of prestige," he said.

For example, Shell Tower in Times Square could make "people think [Shell] owns a whole great big office building."

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Having a name up there emphasizes the clout of the tenant although it's "only an illusion" if they occupy several floors. Examples of naming rights deals include ICBC Tower and Citibank Tower in Citibank Plaza, now majority owned by Champion REIT.

Signage rights allow tenants to merely put their name on the outside, for example, the Societe Generale sign tucked away at the top corner of Three Pacific Place owned by Swire Pacific.

So which companies are most keen on having their name up in lights? "The people who most like naming rights are insurance companies," Dwyer said.

This because when people buy insurance, they also look at the "substance of the firm," that is its size and financial health on top of the terms and conditions involved in the coverage.

"Substance is a critical thing and the portrayal of solidity is an extremely important thing in the marketing of insurance companies," Dwyer said, pointing to insurers such as Manulife and AIG.

"Manulife will often not take premises unless they get naming rights."

Examples include Manulife Wing On Centre in Mong Kok, Manulife Tower and Manulife Plaza in Lee Gardens. It would be natural to assume a price would be charged for the privilege but, according to Dwyer, payment for naming rights was "a factor of the market place."

Typically, landlords would take the view of "why not" if they owned a portfolio of buildings and they do not have their own name up there. "If it attracts a main anchor tenant into the building, let's give the name away," Dwyer said.

In most markets, most naming rights come free of charge. The tenant, of course, will usually need to take a sizeable portion of the space first to qualify.

Two IFC does not have any names on its exterior despite some companies - the MTRC has 18 floors - having a sizeable chunk of ownership.

A spokesman for Two IFC's property management company, Premier Management Services, a unit of MTRC, said the various parties that developed the property, including Sun Hung Kai, Henderson and Hong Kong Gas, agreed there would be no naming or signage rights allowed to be fair to all occupants.

"If you have different strata owners and have different ways of handling this [naming and signage rights], it would not be so good," he said.

Swire Properties generally also refuses to give out signage rights for the company's developments.

"Under normal circumstances, we would not lease out signage rights to any party," a spokeswoman said.

Societe Generale is an exception because it's a "very significant tenant" with 8,500 square metres leased. The spokeswoman said American Express once had its name up at nearby One Pacific Place.

Investment bank JPMorgan managed to put up its logo at the newly- completed Chater House owned by Hongkong Land.

The signs do not have to be high up. At AIG Tower, Bank of Tokyo- Mitsubishi and The Royal Bank of Scotland have their names etched on a plinth in an open area at ground level.

It's not known if Swire or Hongkong Land charged for signage rights but Dwyer said if the market was tight, the landlord might charge for it but how to value it was extremely difficult.

Still giving away naming or signage rights is not without difficulties.

Dwyer said the first thing to be checked was the deed of mutual covenant for the building that sometimes stated the name of the building. If a name change is required, the various owners had to give approval.

Some tenants would insist on a restrictive covenant in the lease stating that the building could never be named after one of their competitors.

Such requests depended on the strength of the market, Dwyer said.

Still the landlord had to tread carefully because if he gave these little things away, to say Prudential, it may mean no other insurer would go into his building.

"So you've got to be very careful in giving them out," he said.


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