Murals in Commercial Real Estate: Can Public Art Create Real Asset Value?

Suspended 80 feet above street level, artist Daas steadies his footing on a small crane platform, swapping out aerosol paint can caps and mixing colors to bring to life an illustrated eyeball the size of his wingspan on a towering concrete wall. Suddenly the North Carolina weather turns, and wind starts rattling his hoist, threatening to buck him off.

Breathing calmly behind his chemical respirator, Daas is focused on the massive project at hand. The logo on the side of his crane lift displays the name of a (heavily insured) commercial real estate developer who is counting on the renowned muralist to make an otherwise drab parking garage stand out amid the Greensboro cityscape.

Daas' work is part of a larger trend toward using art as a tool for placemaking. Murals, installations, and other pieces of public art are increasingly being used as tools to create public spaces that engage the people using them and, for property owners, can impact long-term asset performance.

Murals as a Commercial Real Estate Tool

The 20-year veteran of the street art world sees so much interest in the type of work he does that he spends most of his time nowadays not on a crane, but behind a computer. He's usually responding to emails, getting facetime with clients, securing permits or drawing up contracts.

And the building owners signing those contracts are reaping rewards for their assets. One study by researchers at Toronto Metropolitan University found that placemaking with art can lead to a 64% improvement in how a space is perceived and a 77% increase in word-of-mouth recommendations.

Much of Daas' work comes from community art programs or city planning budgets meant to beautify the block. But more and more murals are being sourced by the real estate world, where the same effect is achieved, even though in that case, he acknowledged, "it's ultimately a money-making interest."

"The landlord wants to attract customers to their retail business or residents to their multifamily building." And if it's done right, it usually works.

Murals for Placemaking and Asset Positioning

Murals and public art are more than just pleasing to the eye. One study by researchers at the University of Cincinnati found that city blocks that had murals had significantly higher foot traffic, rents, and housing values.

Art can significantly alter the viewer's experience of a site, explained Keith Douglas, who helped strategize public art-related marketing efforts for landmark New York City assets such as One World Observatory and the Rockefeller Center before he joined Sterling Bay in 2020 as the development firm's chief innovation and marketing officer.

Whether it's a retail bodega, a life sciences campus or a parking compound, "one of our missions as a developer is to help connect a community's artists with an audience," he said. "We have to ask, 'what's the vibe at the neighborhood level and how is our building connecting to and enhancing that community rather than just being more brick-and-mortar taking up space?'"

An artist's enthusiasm for an installation, especially if they have local ties, can in turn spark energy from the neighborhood, with each feeding into the other. "That connectivity translates to leasing opportunities because it feels organic," Douglas said.

And there's no limit to where murals can be effective, he added. "Why should an industrial building not be used as a beautiful blank canvas to engage with the community?"

At its $6 billion Lincoln Yards megaproject proposal site in Chicago, for instance, Sterling Bay used murals to stir the public's imagination in what's otherwise an industrial wasteland in wait. With 26 individual murals for each letter of the alphabet scattered throughout the massive complex, visitors were able to walk through the site, discover each one and "connect the jigsaw puzzle of what the Lincoln Yards perimeter is going to be 10 years from now."

A mural must be site-specific, though, and Douglas urges decision-makers on the real estate side to grant artists and curators the freedom to do what they do.

Developers can often face resistance from the local community, added Lance Fung, chief curator of global public art nonprofits FC Projects and Fung Collaboratives. "As a building owner, residents see you as contributing to environmental issues or casting a shadow on the adjacent area." Or, he continued, "maybe you're taking up a beloved vacant space, such as a park or a community garden."

Murals and other public-facing art installations are one way for a property owner to buy into a local community.

"Look at Tishman Speyer, for instance, whose developments always include public art,"Fung said. "They 'get it,' and it sets them apart from other developers. Not only do they secure permits and approval from city council members who see them as a developer that wants to improve the city … they win over tenants, they win over residents, and they create a better outcome."

What Murals Cost and How to Measure ROI

But that all comes with a price. So how much exactly does it cost to get a mural painted on the side of a commercial building?

Depending on the artist, the size, the level of detail and the complexity of the project, prices for murals can range wildly, but a broad average is around $25 per square foot, estimates Jordan Giha, founder of Wxllspace, an app to connect building owners and muralists.

Property owners sometimes have difficulty penciling out a return on that investment, and that's because it's hard to measure intangible benefits like engagement and interest in a building, Giha said.

Metrics are something he's working on, though. For one, there are ways to evaluate social media attention. Think of how "Instagrammable" a mural could be, for instance; photos on social media spread organically and inorganically through hashtags and shares. Some murals also feature physical placards with digital QR codes for people to interact with. Those sorts of things provide numbers.

But there are immeasurable benefits to placemaking, Giha continued. "People see color instead of a blank wall, and ultimately it makes people happy."

That's why city planning departments include "Percent for Art" ordinances, Fung explained, which basically mandate that real estate developers dedicate a determined percentage of a project's capital improvement costs — usually even just 1% — on public art. In most cases, experienced planning staffs commission the artwork and manage the project. That's where Fung's curation usually comes into play, and how Daas gets a lot of his jobs.

Many real estate decision-makers, on the other hand, don't know what murals are worth, Giha noted. "There is a value to street art, the same way there's value to an original canvas you purchase to hang in your home. If you pay $30,000 for a mural, as a building owner you should put a price on that piece, separate from the price of land — especially if it's painted by a well-known artist."

"[Murals] are a great experience for the community, they're great for the tenants of the building, and they can often become a hallmark for the building itself," Douglas added. "It's a good thing for the asset, but you have to figure out which operating expenses are appropriate for those costs to be absorbed."

Depending on usage rights in the contract some developers go as far as to use digital media or T-shirts of the art to market their asset.

Even if the artist does opt to retain all rights to the artwork, prohibiting push marketing campaigns, the physical piece itself usually helps promote the building.

"These are marketing dollars," Giha said. "You could pay for a mural with what you'd otherwise put in for advertising and marketing. And those are tax-deductible expenses."

For those who still balk at the cost, Fung helps puts things in perspective. "How much did you pay your landscape architect to do a stone treatment? How much did you spend on industrial carpeting for your elevators and hallways?"

When working with a curator or fixer like Fung or Giha, respectively, it becomes "less of a jousting conversation about costs and more of a collaborative education in industry standards," Fung said. "When it's thoroughly fleshed out and you see the different benefits, you may not want to throw more money in, but you should at least understand what you can get out of it."

Some advice, though: budget for lifecycle maintenance. Fung said it's one thing real estate people frequently skimp on. Wxllspace contracts, for what it's worth, often include specialized protective coating measures and ongoing upkeep provisions.

Murals as a Revenue and Marketing Channel

If you're deciding whether a mural is right for your asset, you may want to think about how it could be part of your operating income.

If you have the right asset, think a corner building with a big blank wall and not too many windows in a well-trafficked neighborhood, you may be surprised to know there's any number of ad agencies willing to lease that space.

Imagine a magnanimous street art legend posted up alongside your building, hand-mixing paints and transforming brick and stucco into a breathtaking work of art. Take, for instance, Shepard Fairey bringing to life a neighborhood narrative espousing female empowerment on a water tower atop New York City's Germania Bank Building. Or Mad Steez promoting one of the biggest movie releases of the year, Space Jam New Legacy, at five street-level sites across the country.

Both were done with the help of Overall Murals, one of several intermediaries that marry outdoor advertising leases with hand-painted street art that purports to brings a lot more than just rental income to a building owner's bottom line.

"Essentially I approach landlords or building owners," explained Ashley Bunnett, Overall Murals' West Coast director of real estate. "If it's legal for us to put a sign on their building I propose us using their blank wall as a canvas for our roster of classically trained in-house and freelance artists, and then we create a lease: a straight partnership in which we literally rent the side of their building."

She has occasionally let landlords know that their building went viral on social media after having a mural commissioned. "Not only do we provide a revenue source," she said, "we create an aesthetic benefit to a building that you don't get with internal tenants."

The right mural in the right place can become iconic, she said.

"In the same way artists did it 100 years ago, mixing paints by hand to make sure it's the perfect color just like they did for old Coca-Cola 'ghost signs' you might see in Manhattan, a hand-painted campaign [for Tom Ford, Spotify, a nonprofit Pride organization or even ginger ale] can become part of the fabric of the city."

And landlords barely have to do more than sign a lease to make it happen, she said. "We coordinate the campaigns and manage the artists, we handle all the permitting, we handle everything going on with legal and we have insurance," Bunnett said. "It's the same as with most other tenants: the landlord basically just has to give us access to the space to paint, and then they collect the checks." Deals with Overall could be as short as several weeks, but are typically around 10 years.

Her biggest piece of advice for building owners is to proactively get the green light before it's too late. "A lot of cities are shifting to [marketing on buildings] only if it's hand-painted, and you can get the permit in place to have that option as a future revenue source. If not, the site could be re-zoned and you'd forever lose out on that opportunity."

Once you have the go-ahead, though, how do you go about finding the right artist for your building?

Aside from word of mouth, Daas said he's not sure how real estate professionals would nail down a quality artist who can also professionally manage the logistics, legal contracts, creative iterations and maintenance involved in even smaller-scale mural projects.

"How do I get a mural painted on my wall as a building owner?" he pondered. "Do I just Google 'artist'?"

How Building Owners Are Sourcing and Managing Murals

Making that connection between building owner and artist is where Giha comes in.

With more than a decade of commercial real estate experience and a longstanding gravitational pull toward everything creative, Giha saw an opportunity to connect building professionals with pre-vetted, on-demand artists — fueled in part through hustle and personal connections, but mostly through the interface of an app that anyone can use.

Landlords want and sometimes need their buildings to stand out, Giha told LoopNet. "They don't want a blank wall. They want to increase foot traffic; they want people to stare at their building as they pass by."

But there's a disconnect between developers and artists, he said.

Confusion over copyrights, mishaps in project management, logistical flops and communication struggles abound when the two very disparate worlds hammer out a deal. Owners sometimes feel they didn't receive what they paid for, while artists can feel undervalued, underpaid, exploited or even bullied.

"People see a beautiful piece of artwork on the side of the building and say, 'Look how fast that went up,'" Daas told LoopNet. "What they don't see is at least six months of negotiations and logistics behind the scenes."

But conduits like Giha's startup Wxllspace hope to change that paradigm by serving as a tech-based middleman for contracting muralists.

Bunnett's take is that murals aren't going anywhere, but only becoming more valued, and Daas agrees.

Beyond individual buildings, "people see how murals benefit the community and how it drives tourism. Smaller towns are even using murals as a way to bring attention to themselves," Daas said. "Travelers will take a 45-minute detour to see a place with beautiful outdoor artwork."