Agency Absorption

Advertising firms expand employee rosters, Downtown footprints

By Sarah Baker

The Downtown Memphis office market has long been one of the more cost-effective of the city’s submarkets when it comes to rental rates, especially when amenities and ambiance are factored into leasing decisions.

Marc Holder answers the phone at Sullivan Branding, which recently completed its expansion into the entire sixth floor of Toyota Plaza, following its 2011 acquisition of Thompson & Co.

(Photos: Lance Murphey)

Yet compared to Memphis’ top performing office corridor, the East submarket, Downtown’s vacancy is still relatively high at 15.9 percent, according to CB Richard Ellis Memphis’ third quarter MarketView report. And East’s average asking rental rate as of Sept. 30 was $20.06, while Downtown’s was $16.37.

Chris Brown, senior vice president with Grubb & Ellis Memphis, said marketing firms have always comprised one of the four main Downtown groups. Others are the architecture and engineering industry, the government sector and law offices.

But the fourth quarter’s absorption numbers could be telling for the Central Business District considering a slew of advertising and creative industry expansions.

RocketFuel LLC, Red Deluxe Brand Development, archer-malmo, doug carpenter & associates LLC and Sullivan Branding have all extended their employee rosters and footprints in recent months.

“The growth in the ad industry, and really what’s become as much the Web design industry, shows that companies are starting to spend money again on advertising and marketing,” Brown said. “Their marketing budgets are growing.”

RocketFuel started 2012 with six employees and 1,800 square feet at Brinkley Plaza. The website design and Internet marketing firm has since doubled that headcount and signed a lease for 4,600 square feet across the entire seventh floor at 88 Union Ave.

Reuben Brunson, CEO of RocketFuel, said companies are allocating more of their budgets on digital advertising.

“It’s critical and essential to most businesses now because it can be very cost-effective and you’re missing out on a serious opportunity if you’re not there,” Brunson said. “Taking advantage of it requires a skill set and a lot of expertise to do it right or just be able to keep up with the technology. You just can’t bring all of that talent in house.”

Brunson calls the area where RocketFuel will soon relocate the “Silicon Delta,” comparing it to San Francisco’s Silicon Valley. Although the cultures are completely different, Memphis’ technology scene is “starting to really pick up,” he said.

“There’s good things going on, and I think Downtown is really where the action is starting to happen,” Brunson said, citing EmergeMemphis as a prime example. “We’re just seeing a lot of things being kind of gravitated towards this corner and I’m pretty excited about it. Hopefully this is sort of a Renaissance, if you will, of Memphis becoming this tech center.”

Red Deluxe is another firm relocating and augmenting its Downtown presence to the South Main and Union intersection, subleasing 10,400 square feet in the old Smooth Moves building from Sullivan Branding.

Eric Melkent, left, speaks with Ross McDaniel and Rachel Adams at Sullivan Branding. The firm has about 50 employees in its Memphis office, including a flurry of new hires that have mostly come from out of town. 

“It does feel like the economy is a lot better than it was even two years ago,” said Stinson Liles, cofounder of Red Deluxe. “It feels like there is a lot more optimism around. For us, I think our strong client relationships are still strong, and then we’ve got a lot of new stuff on the horizon as well.”

The agency is growing its nonprofit and tactical sides of its business, including working with HDTV, digital publishing and iPad apps. Liles said those are mediums that weren’t around 10 years ago when Red Deluxe started and really weren’t much to speak of five years ago.

“We’ve always been small enough and kind of agile enough that we see what’s on the horizon,” Liles said. “Just like TV, outdoor, collateral and all of the other specialties you have to have in this business, it was clear that was going to have to be one of them.”

Meanwhile, farther south on Main, doug carpenter & associates is taking up the remaining part of the third floor at 431 S. Main St., expanding from 2,000 square feet to 5,300 square feet. The less-than-3-year-old advertising, public relations and consulting firm has also added six new employees this year, bringing its total staff count to nine.

“Our clients are definitely becoming more aggressive and we’re growing quickly along with them,” said company founder and namesake Doug Carpenter. “They generally don’t do that if there’s not an increase in ad spending and revenue behind it.”

Brian Sullivan, CEO of Sullivan Branding and ad industry veteran of more than 20 years, said the landscape has changed because consumers are much more accessible now.

“It’s a requirement that you know more about them and their behaviors,” Sullivan said. “There are so many different ways for them to tune in, but also so many different ways to tune you off too.”

Sullivan Branding recently completed its expansion into the entire sixth floor of Toyota Plaza, following its 2011 acquisition of Thompson & Co. The firm has about 50 employees in its Memphis office, including a flurry of new hires that have mostly come from out of town.

“We’re adding lots of specialties that we didn’t have previously,” Sullivan said. “Becoming a different type of agency to be able to really service our client base.”