Brand Building – A Strategy to Attract & Retain Tenants
Ask most any commercial real estate owner, “how’s business these days,” and chances are their answer would be, “as competitive and as difficult as ever.” With the advent of co-working companies disrupting the marketplace, the changing generational-based needs of corporate end-users, the newness of class A developments like New York City’s Hudson Yards, and the influx of property technology (proptech) companies making waves of their own, there is little wonder as to why commercial real estate owners are finding it harder to attract and retain tenants. So, what’s an owner to do? How can they compete more effectively and increase, let alone maintain, tenant occupancy? While some may suggest a building repositioning strategy, in my mind, that will only go so far to overcome the challenge which owners face. What I believe an owner should do is to take a play from a consumer product marketer’s playbook and start to think about brand building.
The term “brand building” refers to a variety of strategies and tactics a company can use to increase the effectiveness and efficiency of its brand, as well as to differentiate itself from the competition. Some of these strategies and tactics might include crafting a new logo, enhancing an interactive experience, using different advertising mediums, partnering with a sponsor, distributing through different sales channels and/or making use of certain technologies. By taking actions such as these, it is hoped brand awareness, value, and relevance will increase among consumers (building tenants) and this, in turn, will lead to an increase in sales (tenant leases). Part art, part science, brand building, as with most anything else marketing related, is never a one and done scenario. Instead, it’s a matter of testing, analyzing, and adjusting on a continual basis.
In the world of commercial real estate, brand building not only refers to building the brand of the company itself but, more importantly, to build the brand of a building. Since each building in an owner’s portfolio is different, based on location, size, price, amenities, architecture, existing tenants, etc., it stands to reason that each building should have its own brand identity and send its own promotional and branding message into the marketplace. The example below illustrates this point.
The Marriott Company, one of the world’s leading hoteliers, is a parent company under which there are about 25 subsidiaries (sub-brands). From the luxury Ritz Carlton to the economical Courtyard, Marriott has a hotel for most anyone’s taste, preference, and budget. If we look at Ritz Carlton and Courtyard it’s easy to see how one is branded much differently than the other, and rightfully so. Whereas Ritz Carlton might be about luxury and service, Courtyard is more about convenience and budget. Ritz Carlton might advertise in the affluent-focused Robb Report, whereas Courtyard might advertise in the budget-conscious Triple A travel magazine. Depending on the brand, and its targeted audience, different strategies and tactics will be/should be used to build the brand and manage consumer perception.
Commercial real estate owners need to see and think about the buildings in their portfolios along the same lines. A class A building in an owner’s portfolio should be branded differently than a class B building. A newly-built building should be branded differently than a 20-year old building. To create a meaningful and powerful brand for a building, an owner needs to think beyond building class, age, location, square footage, lease prices, etc., and consider more qualitative and subjective things, such as:
Does the building have a certain look and feel inside and out?
Does the building have any artwork inside or out that will trigger a certain emotion or thought for the tenant?
How does the architecture define the building? (see image below of The Markthal)
Who are the current tenants and do they project a certain kind of appeal or emotion?
Does the building use natural elements (e.g., light, wood, plants, etc.) in a special way?
Is the building certified in LEED, WELL Building Standard, Energy Star, and/or Wired Score, as each of these lend themselves to a certain feeling, experience and/or comfort level among tenants?
Does being in a certain neighborhood evoke any kind of feeling, thought or significance?
Another determinate of a building’s brand can be who the owner wants to have as a tenant in the building. For example, is the building to focus on start-ups, mature companies or both? Technology tenants, media tenants or financial services tenants?
A good example of how to brand a building can be seen on the Rockefeller Group’s website. The company has developed two separate and distinct branding statements and supporting documentation (i.e., webpages) for its properties at 1221 Avenue of the Americas and 1271 Avenue of the Americas. By looking at these real-world examples, it’s easy to see that branding is more than simply putting a company’s name or logo on a building and calling it a day. An owner needs to go deeper and ask him/herself, and their existing and potential tenants, questions like those above to get to the heart of what a brand will stand for and communicate, and how it will serve to differentiate one building from another. It also helps to study competitors and how they might position and brand their buildings.
To revisit the thought or suggestion that an owner engage in a building repositioning strategy, what many owners may not realize is that a repositioning strategy is rooted in brand building.
Because owners are typically not expert in brand building, they may benefit from the strategic insight and creative services offered by a branding or marketing agency. And, because some agencies specialize in the real estate industry, they are already familiar with many of the issues and challenges which owners currently face. Another professional who may be helpful in the process is an architect or designer, as these people are also familiar with the industry and what drives change in a building.
As with most any consumer product good or service, a commercial real estate owner needs to think about the branding (and overall marketing) of their buildings, as a means to compete, differentiate, and win business. Failure to do so will most likely compound the marketplace challenges which currently exist, and the inability to gain share from the competition.