This category covers establishments primarily engaged in leasing real property, not elsewhere classified.
531190 (Lessors of Other Real Estate Property)
The lessors of real property industry encompasses companies that own and lease, or only lease, to other organizations land used for airports, sports facilities, commercial timber operations, some types of lodging, and natural resource excavation. Industry participants typically do not engage in the enterprise conducted on their land. More than 12,000 establishments were engaged as lessors of real property in 1997. They employed some 37,620 employees and generated $5.54 billion in revenue.
Real estate lessors bring together owners of land and people who are looking for property on which to conduct a certain business activity. They benefit their clients by providing expertise about locating, appraising, and conveying legal rights to property. In contrast to real estate brokers, lessors arrange the conveyance of property rights for a limited time rather than permanently transfer ownership; however, lease agreements are often made for as long as 100 years.
Lessors in this industry are typically entrenched in a specific market niche. A company that specializes in leasing timberland, for example, would have knowledge of timber rights, tax codes, logging practices, and other factors specific to that industry. When it matches a land owner with a compatible lessee, the leasing company helps the two parties negotiate terms and secure a legally binding agreement. Land holding companies often find clients and handle lease arrangements themselves.
In addition to specializing by property function, many real estate lessors focus on one locale or region where they accrue an in-depth knowledge of local zoning codes, demographics, and land values. As a result of geographic and functional diversification, the industry is highly fragmented. In fact, most companies classified in this industry had fewer than 100 employees and sales of less than $10 million in the mid 1990s.
The real estate leasing industry saw rampant growth during the mid twentieth century. Besides general economic expansion that boosted leasing activity, the emergence of eminent domain and other real property controls vastly increased the complexity of land rights and transactions. Likewise, property lessors enjoyed an unprecedented business boom during the mid 1980s. By the late 1980s, however, a virtual depression in most real estate sectors pummeled many industry participants. Going into the mid 1990s, most segments of the leasing industry were still trying to recover from continued economic malaise.
As the economy rebounded and interest rates remained low from 1993 through 1996, the real estate market in general also improved. Demand for most positions in the real estate industry increased and was expected to rise by 10 to 20 percent between 1994 and 2005, according to the Bureau of Labor Statistics. Demand was expected to be greatest for leasing agents with financial and computer skills. Although salaries varied by region and specialty, experienced property lessors in the mid 1990s typically earned commissions of $50,000 to $100,000 per year.
In 1995 and 1996, a series of large-scale leasing transactions reflected the positive economic outlook. When Denver opened its new $5 billion international airport, the older Stapleton Airport became the target of redevelopment that included short-term leasing agreements. The airport's 60 existing buildings (including offices, hangars and the terminal itself) were put on the leasing market in 1995, and a third of the 1.5 million square feet of space was quickly rented to new lessees. Incentives by the city, such as options for extensions of the short-term leases (limited to five years) and credits to tenants for making improvements, were a major enticement to potential tenants.
In 1996, the Cross Timbers Oil Company sold its Tyrone gas plant (spanning a field in Oklahoma and Kansas) to Nations Bank Corporation and BancBoston Leasing Investments, Inc. for $28 million. The leasing companies then leased the plant back to Cross Timbers under an eight-year renewable lease. Cross Timbers seized on this lucrative opportunity in order to reduce the debt level it had accumulated earlier in the decade. Also in that year, Bethlehem Steel Corporation sold a major West Virginia coal mine to A.T. Massey Coal Company of Virginia. The sale to Massey, the fourth-largest U.S. coal producer, included mineral rights to the West Virginia mine as well as the leasing of other mining facilities. Another owner of mining land, United Park City Mines Company of Utah, no longer conducts mining operations itself but instead develops, leases, and sells Utah real estate. Over half of its 8,300 acres of surface land is leased to ski facilities.
A brief run-down of several companies indicates the breadth of the industry in the late 1990s. Airport Group International Inc. of California leases airport real estate and generated $250 million in operating revenue in 1998. Calcasieu Real Estate and Oil Company Inc. of Louisiana is a lessor of oil and gas mining property that garnered $897 million in operating revenue in 1998. Real estate leases generated $397 million in operating revenue for Miller-Valentine Group of Ohio in 1998. Leasing of coal fields generated $28 million in operating revenue for Pocahontas Land Corp. of West Virginia in 1997. Tulsa Metal Processing Co. of Arizona generated $15 million in sales in 1998 through the leasing of industrial land and offices.
"Beth Steel Sells West Virginia Coal Mine." The Baltimore Sun, 4 September 1996.
Byrd, Edward W. "Some Early Progress in the Long-Term Task of Putting Denver's Old Airport to New Uses." The New York Times, 30 August 1995.
Company profiles in General Business File ASAP database.
"Cross Timbers Completes Sale-Leaseback of Hugoton Field Gas Gathering and Processing Facilities." Southwest News-wire, 3 April 1996.
Darnay, Arsen J., ed. Finance, Insurance, and Real Estate, USA. Farmington Hills, MI: Gale Group, 1996.
Occupational Outlook Handbook, 1996-1997 Edition. Washington: U.S. Department of Labor, 1996. Available from http://stats.bls.gov .
"Real Estate and Rental and Leasing—1997 Economic Census." U.S. Department of Commerce. Bureau of the Census. December 1999. Available from http://www.census.gov/prod/ec97/97f53-us.pdf .
"United Park City Mines Company." Hoover's Company Capsules. Available from http://www.hoovers.com .