You cannot brand real estate
David - Michelangelo - 1501-1504 - Accademia Gallery - Florence
“There is only one thing in the world worse than being talked about, and that is not being talked about.”
Early in my career I remember being told, in very strong terms, that in the office market you cannot Brand real estate. That, alongside ‘never mix asset classes’, were two ‘rules’ that cannot be disobeyed. An office building needed to be built to a set of generic standards, and never sullied by having any retail or residential, let alone leisure, incorporated.
Disobey these rules and you won’t have an ‘institution grade’ asset.
A bit like ‘East is East, West is West, and never the twain shall meet’, asset classes had borders. That DO NOT overlap.
Over the years these rules have softened somewhat, but not all that much. We still think of Cities in terms of having CBDs, and different areas where we generally live, work, or play. The very reason there is much discussion around ’15 Minute Cities’ is because few locations have a full mix of all the real estate use classes that are needed to satisfy our daily needs.
And can you name me a commercial real estate company that has a Brand recognisable by the general public? WeWork perhaps? For all their historical faults they did create something that very very few real estate companies have managed; a recognisable and distinct public identity. Take the largest real estate companies in your country and ask yourself ‘does anyone outside the industry know their name?’. Almost definitely the answer will be no.
And for most, that is exactly as they would wish it. They did not need to be known outside the investment community that funded and bought their developments.
Those days are over, and that mindset must be cast aside. Not only are the borders of asset classes melting and morphing, but ‘Brand’ is going to be the next big thing in real estate.
Jeff Bezos says that your Brand is ‘what other people say about you when you’re not in the room’. Your Brand represents your own companies values, how your employee’s actually behave against those values, and your customers impressions of what it is like to do business with you. For people to be saying good things about you you need all three sides of this triangle to be in harmony. Just think of those Brands you love and those Brands you hate - it’s not hard to say where they succeed or fail is it?
In commercial real estate the opinion of end users was largely irrelevant. Buildings were developed for investors, and so long as investors were getting what they wanted (essentially long term stable revenue), the actual users of these buildings needed only the gentlest of TLC. The relationship was implicit in the phrase ‘Landlord and Tenant’.
Today we are moving from being an industry selling a product, to one delivering a service. Critically we now have to persuade our customers that they ‘want’ what we have to sell, rather than just provide them with what they ‘need’.
In a service business you need a Brand. You absolutely have to have a Brand. And real estate is now in the service business. So, from being an industry happy to fly under the radar of public consciousness, we are going to living by Oscar Wilde’s mantra:
“There is only one thing in the world worse than being talked about, and that is not being talked about.”
The next big thing in real estate is going to be Brand building. Specifically it is going to be about creating and curating buildings that are tailored to delivering a specific, defined, and differentiated, UX, or user experience. These are going to be built on top of a profound understanding of the wants, needs and desires of existing customers or the customers being targeted.
Importantly this means moving beyond thinking ‘all customers are equal’ - the aim is to design a Brand experience appropriate to a particular market segment. To an extent the better owners/developers have always done this, but the intensity needs to be raised. Our customers now have the ultimate optionality - as during the last two years they could just give having an office a miss, full stop. Will most companies drop their offices? Highly unlikely, but they will refactor their needs and reappraise their requirements. We need to understand these needs and requirements like never before. We are now in the ‘creating desire’ business.
Which is why this is nirvana for the creative, the innovators and the visionaries within the industry. Or those being attracted into the industry because these new opportunities are now presenting themselves. The chance to forego the generic, to throw out ‘industry standard’ thinking and to fundamentally re-imagine the role and purpose of real estate in our customers lives is tantalising. At least to a certain type. The type that will thrive in this market.
The winners will not look, at all, the same, but you can guarantee that each and every one of them will be building a Brand that does have traction outside the industry. Perhaps at a very local level, or a City level, perhaps Country wide, maybe even internationally and on to globally. The point being that a Brand needs to resonate with its target market, and that comes in many shapes, and sizes. Turnover is vanity, profit is sanity; being a big fish in a small market might be fine. If that is the intention. As would be being a big fish in a big market. There will be many Brand winners; let the creators create.
In this world you need to think heterogeneous, not homogeneous. What is your ‘Brand Promise’? It helps to think about the luxury car market. Take Audi, Mercedes, BMW. Dispassionately you’d have to say they all produce high end vehicles that are able to transport people in great comfort and style from A to B. With very similar performance. But their Brands are very different; they attract different customers to their own, very particular ‘Brand Promise’. Each has a mythology, a heritage, and an attitude.
The lifetime value of their customers is huge, because once you have bought into a ‘Brand Promise’, so long as that promise is delivered, you tend to stay with that Brand. I had Audis for 20 odd years, my brother BMWs for 25, and my father Mercedes’ for 40+. The only thing that broke my Audi addiction was …. Tesla. A Brand so audaciously different it broke the spell.
What if these were real estate Brands? Could we create user experiences that were so specific, defined and differentiated that we could create customers who stuck with our Brand for 20,30,40 years? Could we create real estate Brands that could provide a service to a small startup that over the years grew into a Unicorn for whom we built their own HQ? Could we hold on to customers this long? What would the LTV (lifetime value) be if we could?
Who knows. There are different variables at work within a companies real estate needs that maybe make very long term thinking over optimistic. However what is certain is that someone can create space that is better for company X than their competitors can. Because that type of company is their focus. And they are thinking beyond real estate.
Real estate, alone, is not enough. Necessary, but no longer sufficient.
Our real estate needs to tell a story. Our Brand is about storytelling.
Let’s think about the story being told:
What is the experience of our building? How does it ‘work’. From the moment you walk, or cycle, into it, how frictionless is it to do what you need to do? Check in, park your bike, have a shower, summon a lift, find the right space for your ‘job to be done’, with the right noise, temperature, lighting? And so on. How well does this machine work? How well oiled is it, how smooth, how powerful?
How does it feel to be in our building? Every building, every space, every place, has a particular ‘feel’. From cozy to grand, from warm to cold, from pleasant to unpleasant, from welcoming to aloof. How does our building feel? Does it feel like our customers would want it to feel?
What human skills do our spaces catalyse? There’s not much point coming to an office that does not catalyse human skills. Most technological needs can be satisfied anywhere, so what human skills does our building aim to catalyse? Does our building energise, or enervate people?
Who are we designing for? The aesthetic of our building is going to attract a certain type of company, with particular types of employees. How well do we understand who we are designing for? This is closely aligned with the types of human skills we are trying to catalyse. What are our customers trying to do, and how well are we designing for them.
What can they help enable you to do? People are going to come to an office to do certain things. Some will come for peace and quiet, and for a conducive environment for focussed solo work. Some will come for team meetings, or events or lectures. Or to use a podcast or video studio. Or whatever. The essential requirement is that our building provides the ‘Space and Services’ that enable anyone to do whatever it is they need to do.
What can you do in our building better than anywhere else? This is the TL:DR question. Really the only one that will tell you if you have a Brand and an asset that will accumulate or destroy value. If your building is not the best place to do X, and it does not matter what X is, then you will have a problem. Our customers have to want to come to our buildings. Mostly, and increasingly, they don’t need to. However for many, and in many circumstances, coming in to a workplace that is designed, monitored and optimised for their ‘jobs to be done’ and that helps them be as happy, healthy AND productive as they can be, is very much a feature not a bug.
The broad ‘Brand Promise’ that real estate operators need to give is to create places and spaces that ARE sustainable and a pleasure to be in, that DO treat their customers health and wellbeing with care and respect, and that ENABLE people to be as productive as they are capable of being.
Each Brand will do so in its own way, with its own customers in mind, but the core requirement is the same.
Without a Brand, life is going to get tough. Start building!