Commercial Real Estate: It’s All About the Experience
How is a birthday cake like shopping?
I listened to an interesting presentation not too long ago by a marketing guru where he used a birthday cake to illustrate how our shopping patterns have evolved. It went something like this:
In the ‘50s, Mom would go to the grocery store and purchase all of the ingredients necessary to bake a cake–flower, milk, eggs, etc. Then, in the ‘60s, Mom would go to the store and buy a box of cake mix and prepackaged icing. Today, Mom outsources the party to Chuck E Cheese; there may or may not be cake, but there will be pizza and games and a birthday party that will be the best birthday party ever (until next year’s, of course). Rather than the earlier commodity of the cake (an object), there is now a heavy emphasis on experience.
What will differentiate brick-and-mortar retailers from online giants like Amazon.com is the impression their physical locations can make on a consumer that e-retailers can’t match. Racked touched on this trend toward “experiential retailing” in their recent article, “The Case for the American Mall”:
“The future of retail…will evolve as malls move away from selling merchandise, and pivot to selling brand experiences like “amping up the decorations during the holidays, secretly allowing or paying for ‘spontaneous’ social media shareable group happenings, and setting aside public space for community events on its premises — think farmer’s markets, art exhibitions, doggy yoga, etc.”
Commercial real estate property owners, take note! Do your properties have what it takes to compete? Does your building have a rooftop deck with a garden or an “outdoor collaborative space” (whatever that is)? What about a state-of-the-art fitness center complete with private showers and locker room facilities? Electric car-charging stations or a bike-share program for your tenants? Is the property not only energy-efficient but LEED-certified with interior floors made of responsibly-harvested eucalyptus wood and white and gray marble to give it that clean, timeless aesthetic? (this is no joke—these were all taken from actual property flyers)
While those features might seem exorbitant here in southcentral Wisconsin, there are ways landlords can prep their properties to stand out that won’t break the bank. Take parking, for example. Do you offer valet or covered parking? Is your lot clearly striped and marked, or is it faded with potholes? Is it well-lit? Nicely landscaped?
Cookie-cutter office buildings, bland strip centers, and multiple-family housing without that “wow factor” are going to struggle or, at best, attract low-paying tenants.
Some prime examples of “wow factors” in our market can be found both in Beloit at the Ironworks Complex and in Janesville’s downtown at the Carriage Works building and the recent rehab of an old tobacco warehouse now known as the Gray Goose (check out tenant Foremost Media‘s sweet new digs in the image below). With suites boasting amenities like open floor plans with lots of natural light, exposed brick and beams, and even slides, these properties are as slick as anything you can find in Madison and Milwaukee.