Colorado Real Estate Journal - September 16, 2015
Everyone who attended the recent Apartment Association of Metro Denver Summer Economic Conference heard the common theme of 18,000 to 20,000 units under construction and another 18,000 to 20,000 units in the pipeline over the next four years. While some multifamily owners feel they’re sitting on a gold mine at all-time-low vacancies, the reality is the actual current figures are higher with more and more units coming on line each month. So how do you best prepare for this increase in competition and vacancy rates? Some experts will point to increased bells and whistles with full amenities packages such as dog parks, sky bars – and are we ready for the first petting zoo? Others may push price incentives to lock into long-term leases, or even that dreaded word, concessions. The reality is that more people see your marketing than the inside of the building. Marketing is the first impression, what differentiates your property and says to the audience, “This is who we are.” It’s all about renter behavior and we know that the majority of people make a decision based on emotion. Any good marketing expert should tell you that the real power of marketing is connecting emotionally with your audience. Which is why there is a disconnect with certain owners using a cheap-template marketing approach. There is a huge difference between sticking a property photo with a logo into your template with some bullet points versus an actual marketing campaign that is customized and creatively says something about your development. A perfect example of this is when we had the opportunity to work on one of the hottest new mixed-use properties downtown. They came to us for marketing help with their name and a rendering photo dropped into a broker template. They left with a new branding package and a campaign of an intriguing deck view looking out on the city lights with the tagline “The City Awaits” – a huge difference to make that emotional connection with renters looking for some of the best city living in town. We often hear developers speak with such pride toward what makes their project special. They will point to amenities, services, neighborhood, building design, the residents and so many other aspects. This is wonderful to hear, but why go to such great lengths if the marketing doesn’t reflect how special your property is? Good marketing shares the vision and feeling of each space. This is important when more people see the marketing than the space itself. What does it mean when we say there is a positive return on investment for your marketing? If you think about it, you can come up with all the pricing models out there, but marketing is typically what drives people to your location. It starts at the point of contact, delivers a positive curb appeal (first impression), differentiates from other p r o p e r t i e s and connects emotionally so they want to find out more, which is why there is a positive return on investment to marketing. From a practical standpoint, what does spending $10,000 on a good website mean if hundreds or thousands of interested people are viewing that every month? In the end, that is just over five months of one renter’s average downtown cost of rent at $1,800 month. I think most owners would expect good Web marketing to convert that one person and many more leads, which is why there is such a positive return on investment for utilizing professional marketing. One marketing risk for the coming competition in multifamily is that you cannot flip the marketing switch on and off overnight. Take the large downtown condo developments that happened during our recession.
Some buildings invested in branding and good marketing outreach, which are thriving today. Others cut corners, went into a shell and their properties did not fare as well. The power of a brand is established over time and takes good marketing to build a relationship with people and the area. This not only helps with attracting renters, but also as an overall investment if it ever comes time to sell your property. Let’s get back to the condos that did a good job branding. Would you rather sell those with a positive image, or the distressed downtown projects that didn’t utilize marketing? By now, we know by all the figures that multifamily building is up and will continue to grow. But we also realize that Denver has become a top city to live in with positive trending data for employment, educated workforce and a top city for growth. This means there are more and more renters to capture who you will be competing for with more units. Before you look at bells and whistles or quick pricing fixes, I recommend taking a good look at your marketing program. This is what helps you create awareness, stand out and in the end will garner more market share over your competitors.