Can property have a brand? The subject has proved vexing to the industry, which has long argued that each building is separate and unique, a feature that makes brand identity impossible to create. But increasing demands on real estate investors to provide not just a building but an array of support services to enhance it are slowly forcing the industry to focus on the issue.
Earlier this week, Stanhope, backed by a group of institutional investors, launched Chiswick Park, a 1.5 million sq ft development of park and office space in west London. The development carries a focused brand message. Stanhope and its institutional backers retained the consultancy Wolff Olins to create a special brand for the site, the first in the UK to have an identity at launch, says Stuart Lipton, Stanhope's chairman. Before creating the development, Mr Lipton says, Stanhope and its design consultants, DEGW, conducted numerous interviews with corporate occupiers to find out what they wanted in a work environment.
"What we found out is that they want to be part of a community," Mr Lipton says. "They want to be close to their competitors. They want to be close to their friends." Robert Jones, director at Wolff Olins and creator of the Chiswick Park brand, says the move to brand property reflects a bigger trend.
"In the wider world, we have seen a shift away from provision of products to provision of services. And that is what is happening in property."
Chiswick Park's backers are selling the site not just as a group of pretty buildings with a nice piece of landscaping, but as an all-in environment, complete with concierge service that will collect the dry cleaning, order a last-minute taxi, arrange a meeting room and rent out taxis. It has already secured a pre-letting on a building in the first phase of its £350 million sterling development to the operators of an on-site health and fitness club, and it plans to offer restaurant and coffee bar facilities as well as an outside events area. That landlords are increasingly being asked to be service providers is a fact not wasted on US investors.
"Changes in demand are leading to new roles for landlords as service providers or business partners," write two directors of a US-based Lend Lease venture in the Pension Real Estate Quarterly Review. "In this sense, the role of the landlord takes on a new dimension, as property owners and developers are asked to help tenants exploit core competencies." Several large US real estate companies, such as Equity Office Properties, are already exploiting their role as landlord not only to expand the offerings of telecommunications services to tenants, but to earn additional income from the service. In addition, several UK companies, such as business parks developer Arlington Securities, are well on their way to creating branded properties with services attached.
The business park has its own web site - enjoy-work.com - which rams home the development's message; that is, Chiswick Park is an environment designed to make people love working. "If you enjoy work, you do better work," the slogan says. "If you do better work, you have a better business." The park offers added features such as "wired" benches, allowing employees to work outside with a laptop if they choose. It also promises "surprises" - informative or entertaining e-mails or a jazz band in the restaurant taking requests - all of which are intended to make work more like fun. "There is a growing ethos in the US that says that work should be as much fun as the rest of life," Mr Jones says, elaborating on the park's brand image. "What people are going to demand more and more is that work feels like the rest of life."
But Mr Jones points out another home truth about branding; that is, it becomes impossible unless the brander understands the customer at whom it is aimed.
"At the heart of creating the brand is understanding who the customer is," he says. And that, by most accounts, has been sadly lacking in the property industry where both building design and occupational terms have long been dictated by owners, not occupiers. Indeed, UK property owners can be said to have treated their customers with contempt, offering only long-term leases requiring tenants to make capital improvements, and for which rents are revised upwards only every five years.
William Hill, managing director of Schroder Properties, one of the scheme's institutional backers, points out that in some ways, the recession in the early 1990s was a watershed for property owners, although many in the industry have yet to realise it. The recession, he says, allowed tenants for the first time to dictate lease terms, forcing landlords to compete. "They had to compete for that rare commodity, the tenant," Mr Hill says.
That forced them to offer shorter leases on many occasions, which after redevelopment allowed reletting at much better terms. It also forced them to provide a range of services in order to ensure that tenants renewed leases. "Landlords are just daft if they don't realise that a building's value is a function of its ability to attract tenants," he says. Wrapping both a quality of life and a package of services around a business park, he says, will do far more to enhance property values than simply putting up a pretty building.
