What If Residential Real Estate Embraced Branding?
Build-to-rent is opening the door for “Brand” to become a mainstay in the rented residential market in the same way that it dominates across other consumer markets.
The world of consumer goods has seen dramatic changes. In a little over 40 years, we have gone from marketers focusing solely on product, through the service revolution and now boldly into the experience economy.
Consider this: “tangible” assets, like machinery and stock, once accounted for 83% of the value of S&P 500 companies. Now, “intangibles” like patents, customer lists and staff know-how make up 84% of their worth. Brand alone accounts for 21% of this, over one-fifth of these companies’ market cap or a staggering $5 trillion.
“It’s fascinating that brand just isn’t present in the residential markets in the way it is in other consumer markets," Geraghty Taylor’s Brendan Geraghty said. “The fact that most of us buy our homes from other individuals is the answer but the growth in rented residential opens up a golden opportunity for the industry to introduce the powerful concept of brand."
At the turn of the millennium, 60% of Londoners owned their own home but 60% of the capital’s population will be renting as soon as 2025, PwC research shows. It’s interesting to know that in 1918, eight out of 10 homes were rented privately, compared to only one in 10 today across the country.
There are several big trends coming together to drive this change. Demand for urban living is rising dramatically, particularly among the young. This puts pressure on prices and makes renting the more affordable option. Shortage of land is driving a move to higher density apartment living and people are now more willing to sacrifice space for place. Experiences are valued above possessions and all of this creates a marketplace ready to embrace highly serviced, amenity-rich BTR solutions.
Brand, as it is understood in its widest sense in the consumer markets, is the best way to reach these new customers formally known as tenants. And BTR offers a flagship to bring brand to the residential market.
Brand, which has become somewhat of a buzzword, is much more than just a logo. A true brand integrates all parts of the provider’s business plan and BTR offer. It acts as a differentiator between providers and helps the consumer navigate and select between them. A good customer experience builds trust and loyalty and gives more brand buy-in. As a brand develops, it generates engagement with its customers, making them feel comfortable with its specific lifestyle offering. In BTR, this will deliver lower voids by increasing renewals, extending the length of leases and increasing the number of customer referrals to like-minded buddies. Done well, it will maximise net operating income and deliver business success. This builds reputation and enhances the customer experience.
“Our watchword is #BrandBeforeBuilding,” Geraghty said. “Know how your building will serve your brand before you start to design it.”
Signs point to BTR gaining a larger presence in the marketplace. At the “Residential Investment 2017” conference last year, Nick Whitten of the JLL Residential Research team identified over £50B of pent up demand for BTR investments, and 77% of respondents to a recent RSM survey saw BTR as a mainstream investment class. The British Property Federation recently identified 25,000 completed BTR units but see a pipeline of another 100,000 on their way.
As competition for occupiers heats up, there will be increased need to strongly identify the unique selling points of an offering. Brand will define offerings and allow for style differences. Essential Living, for example, has a pitch that reads, "premium apartments to rent in connected locations". Fizzy Living, by contrast, focuses on value for money locations. Its pitch reads, "quality flats for rent in secure buildings across London". Understanding brand will benefit a number of people involved in the BTR business, from developers themselves to banks and investors. In the market, brand will ultimately be the differentiator.
This feature was produced in collaboration between Bisnow Branded Content and Geraghty Taylor Architects. Bisnow news staff was not involved in the production of this content.