Michael Armstrong, chief executive of RBC Wealth Management-U.S., recently wrote the Minneapolis City Council’s zoning and planning committee that the “ability to brand our new building with a rooftop wall sign is critical to our company’s future growth and success.”
At face value, that’s one of the saddest statements from a business executive to ever appear in the Star Tribune.
The success of a big firm hinges on a little sign? Like, the business goes sideways without it?
He didn’t mean it, of course. RBC is a Top 20 wealth-management firm in the United States and part of the Royal Bank of Canada, neck and neck with Toronto-Dominion Bank for title of biggest bank north of the border.
Friends work there, including our family’s financial adviser, and I can confidently say that RBC has been plenty successful already and doesn’t need a sign at its new place. But it sure wanted one, atop a proposed new headquarters that would be built by United Properties in Minneapolis.
So Armstrong, or his PR advisers, played it about right. If it’s up to politicians — and the vote went RBC’s way last week at a pivotal committee meeting — it never pays to be the side that quietly understates its argument.
Here’s the most interesting thing about it: It’s a fight over something that isn’t worth that much. For the residents of Minneapolis, changing a neighborhood street traffic signal could have a bigger impact on the quality of life. For RBC it was even worth less. Maybe that speaks to the state of land-use regulations in 2019.
The plan is for RBC to be the lead tenant in the Gateway project, at Hennepin and Washington avenues in Minneapolis, with more than half a million square feet of office space, condos and a Four Seasons Hotel. RBC’s sign would appear nearly 500 feet above street level.
In Minneapolis, that’s not done. As city staff noted in its background memo, the Minneapolis skyline does not have the visual clutter of signs at the top of its tallest buildings on purpose.
Lots of things that property owners might want don’t meet the letter of the zoning rules, and many will assume that’s by design. Their ideas might make sense for the property and even be good for a city, but the property owner will still need to apply to get an exception to the rules. This gives city officials the chance to horse trade, maybe for a few nice-to-have features.
All involved knew that United Properties needed to win an exception to get RBC its sign.
In calling around the real estate industry last week, it was difficult to put a ballpark price on the value of RBC’s rooftop sign, as there doesn’t seem to be much of an active market for these things.
No one thought RBC would be paying so much as a penny per foot extra for a tower sign. If it is willing to sign a long-term lease for a few hundred thousand square feet of office space, that’s motivation enough for an owner to get RBC what it wants.
That suggests that sign rights are a close cousin of building names, also not usually something paid for separately in lease agreements for big tenants or even baked into a premium base rental rate on the space.
These things are added to the list to be worked out with the landlord, along with how much the landlord contributes to build out the space, parking, lease renewal rights and everything else. The tenants likely will have to pay the hard costs for any sign that gets erected.
Lots of buildings in downtown Minneapolis are named for tenants, including the home of the Star Tribune. The adjacent Capella Tower was named for a for-profit education company that last year was acquired by Strayer Education, only because it grew to pay rent on a very big chunk of office space.
There’s a temptation to think of the far more visible rooftop signs as similar to the brands all over sports stadiums, like the soon-to-be finished Allianz Field soccer stadium in St. Paul or U.S. Bank Stadium in Minneapolis.
These are undeniably valuable but not as big billboards. If TV, radio and other media stopped caring about NFL football, the value to U.S. Bancorp for its brand on the stadium would sink like a stone.
That’s why U.S. Bank doesn’t get nearly as much value from having its name on office buildings. Just in downtown Minneapolis there is U.S. Bancorp Center on Nicollet, headquarters for the big banking company, and U.S. Bank Plaza. Both have a Caribou Coffee shop, making “let’s meet at the Caribou in the U.S. Bank building” one of the most confusing suggestions you can e-mail a friend.
With no reason for these buildings to ever be on the TV news or ESPN, nobody involved in lease negotiations could have been arguing about a big fee for the naming rights. It’s not like anybody can plan on something like a raccoon attracting a global internet and TV audience.
That’s what happened last June at the UBS Plaza in St. Paul, as a raccoon making its way to the roof of the building captivated that portion of the public without enough meaningful work to do that day.
Accounts of the raccoon’s long climb in the New York Times, Washington Post, CNBC, and the Guardian in the U.K. all show up near the top of internet searches on UBS Tower or UBS Plaza in St. Paul. And the UBS logo was far easier to spot in some of the video and photos than the varmint.
There is no chance the Swiss-based UBS Group and its small office in St. Paul pays much if anything for the right to have its logo at the top, other than maybe having to maintain its sign.
For a brief moment last summer, UBS had itself a branding bargain.