Talking About the Future

This is a duplicate post from David Allison’s column on RENX.ca, a Canadian Real Estate news website.

I was at a lunch last week hosted by the Urban Land Institute in Vancouver. It was just one of a series of lunches being hosted under the umbrella theme of The City in 2050: Creating Blueprints for Change. This is a proactive and thoughtful initiative that aims to help the real estate development community better understand what responsible development means in a world where environmental policies, exploding populations, capital market concerns and energy costs are changing the landscape forever.

What will our industry look like in 2050? Three industry leaders and thinkers weighed in with their opinions.

Gordon Harris is the President and CEO of SFU Community Trust, developers of UniverCity, the award-winning sustainable urban community adjacent to Simon Fraser University’s Burnaby Mountain campus. He pointed to the imperative for moving from Green to Greener, and that how our definition of sustainability has to include not just environmental issues, but social issues as well. I found it startling to hear that the average lifespan of a building is 17.4 years, and agreed with Harris that finding ways to re-purpose and build smarter — to avoid tearing buildings down — should be something we design into the development process.

Mark Holland is a Principal at HB Lanarc, where he focuses on integrating sustainability principles into the mainstream development industry. He talked about our responsibility as a development community to not only think long and hard about new structures, but also existing ones; in Vancouver alone there are over 200,000 homes that will need to be retro-fitted in the next 40 years. Mark and I have worked together on projects before. He’s the best at helping developers understand issues around sustainability in practical terms. He speaks our language.

Sadhu Johnston is the Deputy City Manager for Vancouver, after a term in Chicago as Chief Environmental Officer to Mayor Richard Daley. His points were succinct: we are doing a good job here, but we must do better. We must find solutions that solve multiple problems. We must address the rising cost of housing, as it directly impacts issues of homelessness. We must look across disciplines to solve problems, and collaboratively map out our approach to urbanization issues.

Applause is due to the ULI for staging this series of events. Sometimes I’m convinced the real estate development industry is only willing to innovate a millimeter past whatever the last successful project was. But if we’re largely responsible for the built environment, especially in terms of housing, we need to think bigger thoughts, collaborate, question and challenge the status quo. Events like this one get the conversations started. Bravo.

Phoenix market hits bottom. Ready to grow.

This is a duplicate post from David Allison’s column on RENX.ca, a Canadian Real Estate news website.

When real estate industry insiders talk about the cities in the United States hardest hit by the recession, Phoenix is near the top of the list. However, I was there last week, and the situation seems to be changing.

There are several signs that real estate prices in Phoenix have found the bottom. Granted, most of the talk is conjecture at this point, but articles like this one are easy to find online and in the carbon-based media. These sources indicate that the fundamentals are strong, prices are at the bottom, and the market is on a strong simmer, if not quite ready to boil over. This is the perfect time for investors and buyers to be thinking about Phoenix as a smart play.

One New York banker commented that large-scale investment properties in default have had, until recently, only one or two potential purchasers sniffing around. In the last couple of months, however, as many as 30 or 40 offers are being received. When the big boys with the money to buy buildings of this scope and scale are lining up, it’s a good indication that market confidence has returned.

Vancouver-based Rob MacDonald, of MacDonald Development is a veteran of the real estate investment sector and is in the midst of re-launching a condominium tower in the urban centre of Phoenix. Formerly sold as Century Plaza at the peak of the market, the building has been renamed One Lexington.

“I’ve been visiting and working in Phoenix for decades, and I’m very bullish on what’s happening in the city centre,” MacDonald said. “With the new light rail transit as a catalyst, the downtown and midtown areas are showing exciting signs of a new urbanism. In very short order, Phoenix will have a thriving core. It’s this revitalization, combined with the market recovery that I’m seeing all around me, that made our team confident that One Lexington would be a good investment.”

It turns out that a good investment for MacDonald Development is a good investment for smaller investors too. With far-reaching views, huge outdoor swimming pool, fitness centre and a light rail station out the front door, pricing at up to 50% less than the previous sale prices should attract past-purchasers and new devotees as well.

While it’s true my company is involved in this project (it’s a great example of Sell The Truth in action) and that I therefore have an abundance of belief in the offering, I’m not alone. The blogosphere and the traditional media are excited, and words of encouragement are flowing. You can read the most effusive post here. Even the Canadian media are getting in on the act. Here is the article in the National Post on the project.

Why am I devoting a column to a project that I have a vested interest in, and opening myself up to accusations of bias? There are two great reasons.

First, as stated, this project is a very good example of Sell The Truth in action. Take a look at the a href=”http://www.onelexington.com”One Lexington website/a and see how much straightforward Marketing Journalism we’ve packed in. Website visitors will know exactly what’s happened before, what’s happening now, and all the great reasons to engage with the sales team. This is the antithesis of how real estate projects were marketed in the past. Unfortunately, some developers still haven’t got the memo that a whole new breed of consumer expects the facts up front, and isn’t willing to follow the old rules and do things the old way.

More importantly, readers of this column are in the business of real estate, and I think a resurgence of interest in the seriously recession-struck Phoenix market is big news. Local journalists agree with me. And so does the National Post. It’s time to look at the Phoenix market again; as investors, as buyers, and as a city to watch as it rises from the ashes of one of the worst periods of economic turmoil any of us have ever seen.

Thinking Long Term

This is a duplicate post from David Allison’s blog on RENX.ca, a Canadian Real Estate news website.

Anyone who has been a real estate developer for more than a few weeks remembers the “good old days” when investors and a few end-users could be counted on to line-up the night before a project sales centre opening. In some places in Canada the line-ups are back, but my guess is this is a temporary response driven by fears of rising interest rates. So, fine, enjoy it while it lasts, but let’s think about a more long-term, sustainable approach to real estate project marketing; one that ensures the right people for your project find you regardless of the interest rates, and one that ensures your own corporate brand is burnished and made more valuable as each project is launched, sold and completed.

In the old days, standard methodology for marketing a real estate project relied on what I call a “drip-feed” of information. Some mysterious advertising and hoarding would hit the market, usually with a snappy or provocative headline and a sexy picture of a stunning view or an architectural detail. During this time period you were urged to pre-register, and more often than not you had very little idea what you were registering for, or how much it was going to cost. The promise was that if you gave us your contact information we’d give you a bit more information; and in the heady days of guaranteed rapid equity growth, that’s all it took. People would pre-register in droves.

Next would begin the dance. New versions of the promotional campaign would include a bit more information, and urge further registrations. When the flow of registrations slowed, more information was released. Simultaneously, the sales team worked the leads, emailing and/or calling the registrants to determine the level of interest. Leads were ranked, and the best ones, who were the most motivated, were promised a package with a lot more information in exchange for converting to a “reservation,” which meant sending a cheque for a substantial albeit refundable deposit.

The reservation system purportedly “held your place in line” as there were so many people scrambling to buy a piece of the dream, and your financial commitment would ensure that your option to buy was secured. At the time of the reservation you were asked to indicate your first, second and third choice of suite, and the sales team promised to do everything they could to make sure you got something that was on your list. Opening day was a frenzy of buyers writing contracts as fast as they could, according to a pre-determined time schedule designed by the sales team to ensure maximum absorption. Everyone was happy. The developer achieved rapid sales, and the investor-buyers had a piece of paper they could assign to someone else in 6 months for a 20% lift on the purchase price.

Today, when the majority of the buyers for a project will actually take ownership of the home they buy, and will, more often than not, live in that home, the old system is broken. Except in rare cases, people want to know a lot more about a home and a lot more about the developer than in days gone by. We are all being far more careful with our money, and the sheer volume of information we require before we trust a seller is exponentially larger.

So, what’s a better way?

I call it Marketing Journalism. Marketers need to stop acting like marketers and start acting more like journalists. For every project, unearth and tell all the stories you can possible find about why the project is great. Stories about the region, the neighbourhood, the building, the suite features of course. But also tell stories and share information about demographic predictions for credible third-party sources for the area; stories about the neighbours, the shopkeepers, the civic plans for the surrounding city blocks. And don’t forget the micro stories; why did you choose those appliances, that soundproofing system, that construction company? Who are the people at the engineering firm working on the rain-screen technology and how innovative is their system? What kind of thought has gone into the placement of the doors in the suite? Where are the electrical outlets? Why?

Providing all the “news” about a project up front, through a blended media package that includes traditional and online channels (and yes, even social media) will give prospects a lot of facts to consider. The prospects who review this information will see how credible and passionate you are about your project. And they will register if they think the project is a good fit for them. Be warned, however, because you will attract fewer registrations. On the other hand, the people who do register will be self-qualified, and the conversion ratio will be much higher. Your sales team will initially be worried, as they are accustomed to having thousands and thousands of leads. Instead, they will find that everyone who they talk to is knowledgeable, and to some degree already more than vaguely interested in buying. It’s more honest. More real. And more satisfying for everyone involved.

Perhaps the most important benefit? People will come to trust your company. They will see that you care about the buildings you build. They will come to associate your brand with quality and credibility. It will make all your projects easier to sell, regardless of economic conditions. Finally, it means that you are selling the right people into the right projects. They will be happier with the home they buy. And they will thank you for it.

David Ogilvy, the original fact-based marketer

This is a duplicate post from David Allison’s blog on RENX.ca

In the social media- and online marketing-based consumer economy that we are all working in, a lot of people are prattling on about how important it is to be straightforward and honest and transparent, and how vital it is to tell a great story. This is not a new idea. In the 1950s, David Ogilvy was a proponent of what we at our company call Marketing Journalism. Marketing Journalism is messaging based on facts and news. It’s what works today.

Let’s see what we can learn from the master.

I wrote a book for real estate developers about a year ago called Sell The Truth (download a free copy here www.braunallison.com) and at the time felt very smug about having pointed to this new filter for communications that would become de rigeur for our industry. It doesn’t seem like such a big crazy idea now, as I think most developers have realized that yesterday’s hype-and-jive mode of creating messages is no longer valid. Ogilvy was even more prescient, with his emphasis on using straightforward words to tell people stories that illustrate what makes a product better than the other products you could choose instead.

Here’s a very famous headline by Ogilvy, for Rolls Royce:

At 60 miles an hour the loudest noise in this Rolls Royce comes from the electric clock.

Notice how simple it is. There’s no pun with double meanings or outrageous hyperbole. It’s a simple statement, that tells you what the ad is about and what the benefit is. And of all the benefits that could have formed the central premise for this headline, this one (luxurious silence) reinforces the brand position of class and refinement.

Now compare headlines I’ve plucked from Canadian residential real estate developments currently in the market:

Enlightened Living.
Live the Life.
Art and Nature in Perfect Harmony.

Please. Can we all stop using these say-nothing lines? These headlines fail to inform, educate or even inspire. And, as Ogilvy points out, 5 times more people read the headline than any other part of an advertisement. Similar stats would be true for blog posts, Facebook entries or Twitter feeds. But the real lesson here isn’t just about headlines. It’s about overall intent.

People who create advertising and marketing for real estate developments need to remember that the headlines, the pictures, the text, and the overall approach that is most effective today, regardless of what medium is selected, is more like journalism. Consumers are looking for credible information to help them make purchase decisions. No matter how cool or sleek or entertaining or kooky a marketing campaign may seem to the agency you hired and your management team, what really matters is truth. And plenty of it.

Your campaigns could share some research findings. Illuminate a little known fact about your product. Tell the reader why it is better, faster, stronger than competitive offerings. Give a real-life testimonial. (Please don’t fake a testimonial. Nothing is worse or more annoying). Whatever story you decide to tell, make sure it really matters to the consumers you are trying to reach. Don’t waste your time, money or credibility being clever. Be smart instead.

We are not all legendary writers like David Ogilvy. But it would be a great idea for anyone trying to survive in this economy to re-visit his seminal book Ogilvy on Advertising (buy it on Amazon here)

One of my favourite quotes from Ogilvy is “I do not regard advertising as entertainment or an art form, but as a medium of information.” I couldn’t agree more.