Real estate is one of the oldest asset classes known to mankind …… pretty obvious when you think about it, after all even Fred and Wilma needed somewhere to live. Cave drawings have been found that suggest rudimentary forms of currency were exchanged in return for shelter as early as 30,000 BC. Homo erectus then left the caves and tribal way of life and formed agrarian societies, whereupon defensible property rights were developed and the trade-off of occupancy for a fee paid to the “owner” of the property was established more widely. Fast forward to the present day and the landlord-tenant relationship remains widely accepted across most areas of commercial and residential real estate. However, at Moorfield we have long been of the view that there are some enduring industry dinosaurs that have time-travelled along with this fundamental relationship – creatures of habit that need to be chased into extinction:
Principally, your tenants are your customers is the key mantra that must be adopted. We have seen first-hand the difference brought to an asset when it is managed in a way that proactively focuses on customer experience – from the visual aesthetic of the approach to a building (inside and out), to the level of concierge services, community events and amenities on offer. It can breathe life into both an asset and its immediate area and gives the landlord multiple opportunities to communicate and engage with its customers. Retailers and hoteliers have long understood the importance of the psychological factors which generate loyalty, cooperation and ultimately maximise revenues – and in a world which is demanding greater flexibility, the rest of the real estate world needs to catch up.
So what does this require? A shift in deeply ingrained attitudes principally across what is meant by branding, amenities, design and customer service. Let’s look at each of these briefly in turn:
Branding – branding is not just a logo and some engaging visuals. In my opinion, the term “brand” in our sector refers to the identity of the asset; the life and soul which needs to permeate every level of its design, operation and customer interaction consistently and which itself informs the bricks and mortar stage of a development or refurbishment. It’s easy to see how well known brands such as Nike, Apple and Facebook all display their brand as a lifestyle, reflected in their corporate ethos and values as well as their marketing campaigns. The Instagram generation are looking for lifestyle inspiration that reflects their values and preferences, not just products with pretty packaging. But what does this mean for real estate?
We want our customers to identify with our brands and relate to the spaces and identities we create, and we want to make it as hard as possible for them to leave by providing relevant and value-add services that will assist them with their important task of enjoying their own lives (residential) or talent retention (offices) – all communicated through channels which resonate with them.
The second element is the movement towards communal living/working. It will not have escaped the attention of most in our industry that there is an increasing focus on the BTR, micro-living and co-working sectors and much discussion has ensued regarding the mix of amenities and services these developments provide and the trade-off against personal demised space. This has been a tried and tested approach for decades in the hotel space – I remember first visiting the, then desperately trendy, Hudson hotel in New York in the early noughties where my microscopic sized room was compensated for by fabulous communal spaces and amenities and design-led rooms which invoked aspiration despite their diminutive square footage.
Office space is also moving in this direction, with increased hot desking and an emphasis on collaborative endeavour. In our multi-let offices, whilst we remain a step away from the co-working spaces, we recognise the importance of amenities such as on site showers, gyms, café areas, lockers and lounges/shared spaces that are vital in appealing to modern occupiers, as well as being key to enabling us to offer our additional services. It’s hard to use on-site events to create a sense of community if you don’t have the space available or if the space you have is uninspiring and inflexible!
Moving to the third element – the importance of occupational design (rather than architecture). At Moorfield, we are design-led in our approach to our assets because we think aesthetics are what inform most people’s initial perception of a space – in a world where people are becoming increasingly discerning in this respect. Housebuilders and hoteliers have understood the importance of this for years and we are simply extending this principle into our rental homes, student accommodation and traditional assets.
Last but not least, there are the service levels. Of course, it is essential that there is a system in place to respond to maintenance issues swiftly and automated notification systems that have been adopted by the likes of Amazon and Ocado (and almost every app driven service provider) will become mainstream and expected. However, we also offer concierge style services across most of our office buildings and across our BTR and student accommodation in recognition of the pressures on people’s time. Getting the right service and events tone is essential – too little and you lose the opportunity to create a community and to drive additional revenue streams, too much and you overwhelm your customer base who will then “switch off” from engagement.
We live in a consumer world that has seen considerable changes in behavioural patterns over the past two decades – from the rise of the online shopper, the advent of social media and a re-evaluation of life/work balances by the millennial generation. I think that embracing all of these changes and trying to prioritise quality of life experience is key to remaining ahead of the game in real estate investment. Our occupiers are our customers and that is how we should treat them.