The Experience Economy Affects Commercial Real Estate
The commercial real estate market is extremely competitive and enticing major brands to select one development over another requires more than just “location, location, location.” With everything getting “smarter,” from devices to cities, the expectation for brands is that real estate property will keep pace with evolving technical standards. Up until now, branding considerations in property design have taken a backseat in terms of developers’ top priorities, but they will become increasingly important as the experience economy continues to mature.
Looking ahead, developers should think differently about their properties to improve value and increase marketability. No industry has perfectly balanced an equally scientific and thematic approach to creating immersive brand experiences like the theme park or attractions industry. While traditional commercial real estate and entertainment are vastly different, there are disciplines and approaches from the entertainment sector that traditional real estate developers should consider implementing in more subtle ways.
Most people don’t realize that every ride, every restaurant, every landscape found at theme parks is not just planned, but also scripted to create a storied experience. Theme park developers know exactly when, and for how long, they plan for patrons to interact with specific attractions. They develop this through clever use of space and engage the five senses, creating back-end automated technical functions of sound, display, lighting and sometimes smells, that trigger at specific times during the day. These factors are structured with the purpose of creating an immersive experience to engage and retain customers for maximum park-time. In a sense, the product is the guest experience and the money generated from stores and shops is the bi-product. To orchestrate such precision on a massive scale is a core discipline, generally not one resident with developers. However, real estate is a business of vision and aspiration. Investors and patrons alike are no longer satisfied with ‘four walls and a bathroom,’ disorganized cities or basic retail experiences.
Developing storytelling and emotive experiences in theme parks are overt. Guests are there to be entertained and amazed, but that’s not typically the case with commercial real estate. Nevertheless, developers have begun to understand that non-entertainment properties should provide guests with convenience and themed ambiance. In today’s more dynamic worldwide real estate market, the commercial real estate vision that integrates storytelling into the property is the one that achieves funding and the support of guests. The trick for developers is to recognize the primary objective of the property, but understand the need for a subtle injection of entertainment—a creative kernel that design and layout are built around.
For instance, an overt theme like Mickey Mouse won’t be found at a co-working office building (unless you’re Disney), but developers may want to build around a nautical beach vibe to attract young upstart companies located in Silicon Beach, or with a more minimalistic and industrial style for a very specific group of high valuation start-ups. The goal is to have members or customers enter the premises and connect on an emotional level. The property that perfectly encapsulates the outdoors might include fleeting sounds of birds over the speakers or fluctuate the lighting slightly at moments to resemble natural sunlight. A more blatant example of this practice is a hotel that pumps the smell of money through the air vents to connect with wealthy clientele. Developers should think beyond brick-and-mortar and aesthetics of the property, to reach their audience, investors, or guests at an experiential level.
Making the guest experience scientific
Theme park development is equal parts creative design and science. The science quantifies the guest experience into metrics that define venue stickiness, customer spending estimations and the number of guest touch points. Commercial real estate developers can adopt this approach to more accurately forecast the return on investment for brands.
Developers often rely upon soft metrics that lack insight into consumers’ use and perceived value of the property. These measurements might include generic subjects such as the number of rooftops and other venues in the area, and the proximity of the property to public transportation. By refining their metrics to focus on guest experiences, developers strengthen the confidence of brand customers to participate in the property. It isn’t just about foot traffic, it’s about being a destination.
Retail property developers are competing for brands with the finest reputations. Thus, while Apple can gain foot traffic in just about any location, developers draw a competitive advantage in landing marquee tenants by illustrating they’ve strengthened both the consumer and shopping experience through the property’s thematic design. Developers must define their target tenants during the concept phase, and script the story and atmosphere to match. Not only does this increase the odds of enticing brands but attracts investors to construct the property initially.
Creating secure and safe technical backdrops
Behind every immersive experience is a hidden technology hub that powers the systems, controlling elements like heated floors, sounds, room temperature, videos, or smells. The precision, timing and consistency of every element is key to creating the desired experience. Consider theme parks. Water droplets falling on guests in an 4D experience are measured one at a time and must coincide to the instant with their corresponding display. Technology ensures that the unique functions of each experience are self-sustaining, automated, safe and secure.
Safety is paramount to theme parks as it should be with commercial real estate. Fundamental to this is an integrated IT and security systems environment. These automated systems powering the experience are becoming a staple of smart buildings, and developers should incorporate this strategy into their properties while it’s still considered a luxury rather than a necessity.
The subtle extension of the principles and disciplines of theme park design to commercial property is a needed progression rather than a transformation. Developers mired in the traditional design of property development should strongly consider thinking outside the ‘brick box.’ If brick-and-mortar will survive the disruption of online purchasing, a property must become more experience-based and less transactional. Transactional development inevitably leads to the same problem with a non-obvious solution: “How do I differentiate myself from a property with naturally better placement?” Development with a subtle, integrated backdrop of entertainment built into the property will win out over the traditionally myopic approach to buildings, retail, even communities.
Article Resource: National Real Estate Investor