Despite 28 years of working in New York City's real estate industry, I am still amazed at how developers and brokers alike can be counted on to be resistant to changes and new ways of doing things. Some are complacent, sticking to old methods as if they were sacred traditions–"that's how we've been doing it for a long time, and we've done just fine." Others simply have no vision: their idea of real estate is to copy whatever it is their seemingly successful competitor is doing. They isolate the industry in a self-imposed boundary, opting for familiarity over innovation, and thus find themselves constantly decades behind other industries in terms of technology, products, and methods of reaching their targets.
What amazes me is how most real estate developers have the same limited vision as the brokers they hire. They think of lifestyle in terms of cabinetry, or placing a gym or a seldom used movie room in the building. They think of marketing as a bunch of fancy printed brochures few buyers ever look at after leaving a sales presentation. They think of online marketing as the same old boring websites, with ridiculous renderings that haven't been interesting since early 2000.
I believe the problem lies not in the lack of imagination, but rather in a somewhat flawed understanding of what real estate is and what it should be. So I've outlined six basic principles for developers who dare to remain relevant in the future, especially with the increasingly powerful millennial consumers.
1. STOP OVERPRICING, YOU'RE KILLING YOUR OWN MARKET
Yes, in the short term, you make great gains by pricing high...in a booming market. But that boom is short lived and when developers see a downturn, you should adjust accordingly. Information about sales is readily available now. Unlike before the internet, you can no longer fake-hype your way by telling people about "robust" sales, hoping that it becomes a self-fulfilling reality. It won't. Moreover, millennials in particular are not as keen on status spending. They have other interests like traveling and furthering their education. Most of the time, they see real estate as a short term investment. Few have emotional attachments to the homes they buy. They are not looking to hold on to it for generations. So paying high upfront doesn't make much sense. If you make slight adjustments in line with a logical return on investment, your product will always move quickly. Unfortunately, most developers hold out. You know what happens? Things take longer to sell. And when that happens, the market looks worse than it is.
2. DON'T FALL FOR YOUR OWN MARKETING SPIN, CREATE A UNIQUE PRODUCT
As an experienced onsite marketing expert of developments, I can create a compelling narrative for any project that I'm collaborating on. The stories I tell are always based on my vision of what residents might experience living in what my developer clients build. It doesn't matter whether it's a boutique building, a large complex, near the water or in the middle of a busy city block, I always find a way for potential residents to envision a wonderful life there. BUT you should at least give me something more than the same product another developer is building across from you. If you admire yourself for building an oddly shaped glass structure, look around. You can find those anywhere in the world, with the same amenities, even the same kitchens and finishes. Give your buildings its own personality. You never want it to come across with the message: "Live here. Be the same."
For several years now, I've been telling my clients to incorporate lifestyle services into their buildings. But there's another thing that's also important–innovation. Business in the information age doesn't reward the blissfully ignorant. If your idea of setting yourself apart is using Calacatta marble, well, you're in good 15th century company. Don't get me wrong, good materials are mandatory. As the global economy increasingly begins to lean more on businesses that are socially and environmentally positive, the real estate industry will itself be transformed, too. You should be thinking technology, efficiency, and sustainability. We're not talking just getting "Green" certification. It should go beyond a checklist for government and marketing purposes. Bettering the environment should be a prerequisite in your planning process, because sooner or later, this will be the standard for all buildings.
3. DON'T BUILD PRODUCTS, BUILD SERVICES
If your idea of a technology savvy real estate firm is having listings posted on a website or slide shows in a showroom, you should go home and get rid of your betamax and kitchen phone with the long cord. Imagine people living in your building in the future and figure out what things they might wish to do on a day to day basis, not just today but in the future. How will smart technology enable them to cook, to purchase groceries, to work out, to maintain their homes? How will it relate to their passion for art, music or fashion? How will they get their news, media broadcasts, etc.? And what can you do to help with these? When you build, pay less focus on product fads and gimmicks. Direct your eye instead towards, if not providing services, being a conduit for them.
4. YOUR MARKETING COMPANY'S UNDERSTANDING OF THE MARKET SHOULD BE MORE BEYOND THEIR COMPANY'S MANUFACTURED REPORTS
Many developers hire large brokerage companies that boast their own "onsite" divisions. The rationale is that these companies have resources geared specifically for marketing new developments. And to a certain extent, that is beneficial. But in reality, it poses real issues. You need agents who are on the field, working with buyers and tenants on a day to day basis. Otherwise, it's akin to having a technology company asking an engineer who has never driven before to build automated cars; or a defense contractor building a tank without ever having consulted with the army. It is easy to have tunnel vision when you're sitting around an office crunching numbers all day. That's why most market reports are flawed. It doesn't take into account the most current mood of consumers (is it stable or unstable), what the buyer/tenant pool really is (is it dwindling or increasing), what the aggregate emotional reactions of buyers/tenants are with different products, and what they will be looking to have next (not on this particular purchase or rental, but in the future). Almost every industry these days have employed user-oriented design processes; but in real estate, the mantra still is "if you build it, they will come."
Second, downside to hiring these large onsite companies is you get salespeople with hardly any experience selling anything. It's much cheaper for them to do that than to have an experienced broker that makes a lot of money in commissions take on a project. To be honest, if making money is my only goal, I'd simply do resales. There's more money there. But I take pride in taking part in the creation process, in having some sort of real product to look back on, not just transaction numbers. To me, that makes the difference. My client's success is my success, too. Common values and goals make for the best collaborations.
Lastly, don't think that a firm that has a large inventory allows your product to sell faster. It doesn't. Think of Amazon. How many stores sell the same pair of shoes? Does Amazon care which particular store you purchase your shoe from? No. Does it care that you'll have to scroll through pages of listings just to get to your store? No. So why do you think a large brokerage firm will focus on moving yours?
5. BUILD COMMUNITIES NOT BUILDINGS
Each of your buildings should conjure a certain philosophy of living. People no longer live in "nice" buildings. They live in spaces that reflect a particular statement about themselves and the values they have. If you would like to build something where affluent people can just "park" their money, that's fine, too. Just understand that that pool of buyer has its limits.
Related to the previously discussed points, future developers work with a marketing/brokerage company that has deeper interests than just moving real estate. In order to offer buyers and tenants more choices that excite them, someone on your team needs to know more about other industries, products and services. About a year after I started publishing the magazine, I fully appreciated what Martha Stewart had accomplished. So much research goes into evaluating each product/service we feature (what makes it better, what doesn't work, etc.) that we might as well do it ourselves.
Shared interests are what create community in a building or development complex. While it is true that people, especially in New York, used to be guarded even with their own neighbors, millennials in general tend to be more socially connected.
Building in-house communications are flooded with residents who share information about services they liked, events they enjoyed, organizations they support, as easily as furniture they would like to sell, even items they are happy to share. You should take time to understand what's important to them as much as, if not more than, what interior "look" is trending.
6. LET HIGHER PURPOSE BE YOUR BRAND
The strongest corporations that survive the hardest times are those who have a more profound mission than just making a quick buck today. They understand that they belong to a world that's bigger than they are, and people respect that. And that respect in turn earns them consumer loyalty. Amazon, Apple, Microsoft, Facebook, Google, etc.-- all these companies continue to strive to change people's lives. If your only purpose is to make money, you may still get some business, but you won't earn loyalty. Loyalty is what keeps people focused on you and your projects.
6A. VALUE DIGNITY.
People can fake their way through business, but in the end, no one can fake it with oneself. The truth always has a way of manifesting. Don't get swayed by hype and celebrity, and don't make it your purpose. If fifteen minutes was the measure of fame before, it's merely down to seconds now thanks to social media and online videos. Everyone is competing for that fame and celebrity status. Focus instead on the quality of experiences both for you, your consumers, and your team. Because in the end, that's truly all that matters in life.