The typical way to do it looks something like this:
Hire a creative agency
Come up with a new name and brand identity that speaks to your target market
Create a new website and new social media accounts
Start marketing the project with this new single-purpose brand and identity in the forefront (the developer's brand is usually far less prominent)
Of course, this is the typical way and things do vary. What I would like to discuss today is this last point: the interrelationship between new project-specific brands and developer brands. Because in most other industries, the brand of the company is paramount. It is everything. When BMW releases a new car model, it is BMW and then the something. It is not the something, with BMW hidden at the bottom of the page.
So why is real estate any different?
One possible explanation is the entrepreneurial and opportunistic nature of development. New projects are often the result of people and groups coming together to make a specific "deal" happen. And unless you're an established player with a long history, you may not have a consumer-facing brand with much equity in it. So you rely on a new single-purpose one instead.
The typical way to do it looks something like this:
Hire a creative agency
Come up with a new name and brand identity that speaks to your target market
Create a new website and new social media accounts
Start marketing the project with this new single-purpose brand and identity in the forefront (the developer's brand is usually far less prominent)
Of course, this is the typical way and things do vary. What I would like to discuss today is this last point: the interrelationship between new project-specific brands and developer brands. Because in most other industries, the brand of the company is paramount. It is everything. When BMW releases a new car model, it is BMW and then the something. It is not the something, with BMW hidden at the bottom of the page.
So why is real estate any different?
One possible explanation is the entrepreneurial and opportunistic nature of development. New projects are often the result of people and groups coming together to make a specific "deal" happen. And unless you're an established player with a long history, you may not have a consumer-facing brand with much equity in it. So you rely on a new single-purpose one instead.
But perhaps the main reason is that, as an industry, we have never really succeeded at making buildings a product (architects sometimes despise when you call buildings this). It is for this reason that every building can feel like a prototype and that prefabrication remains this dream that never seems to become a reality. A product implies something repeatable and producible at scale. And buildings are generally not that. Every market and site are unique.
All of this said, there are ways that developers are building meaningful brands for themselves.
The first way is to obviously focus on building your own brand alongside or in lieu of strong project brands. One example of this is Toronto-based Urban Capital. They build a specific kind of condominium building/product and, to the extent that it's possible, it doesn't change whether they're building in Saskatoon or in Halifax. David Wex, one of the partners, describes this as branded vs. opportunistic real estate development.
Another example is Toronto-based Fitzrovia (which I wrote about, here). They are one of if not the most active rental developers in the city. And if you go into one of their apartment buildings, you'll find the same No. 10 Dean coffee shop and bar in the lobby; the same rooftop pool (called LIDO); the same gym (called The Temple); and the list goes on. Their goal is to build a consistent and hospitality-like experience for apartments.
The second way to go about building a brand is to make it so attractive that other developers will pay you to use it. The best example that I can think of is London-based YOO. A partnership between John Hitchcox (a developer) and famed designer Philippe Starck, they have built a business out of creating branded residences for third-party developer clients. And this is in some ways the holy grail of development: you get paid without taking on the risk of building.
Of course, this same licensing model is also used with hotels. And hotel brands are globally the most common kind of branded residence. What this obviously tells us is that brands matter a great deal in real estate. They matter so much that developers will pay to use the right one, because it will likely command a premium and it will likely increase sales/leasing velocity.
It is for this reason that I've always felt it important to grow the parent brand alongside any project-level brands. And it's why we never bother creating new social accounts for our individual development projects. Brand building takes time. If you're going to invest time and money into one, why not take advantage of the compounding at the very top of the house.
One way to define "brand" is that it is "the sum of how a product or business is perceived by those who experience it." And it's a pretty awesome construct when you stop to think about it. Because if I perceive one brand to be superior to another -- which might just mean that it better matches my sense of self -- then there's a good chance I'd be willing to pay more for that brand.
And if I happen to own a brand that people perceive to be valuable, then I can also monetize this brand by lending it out to other people for money.
I am not the target market for Restoration Hardware, I mean RH. But I do think it is interesting the way they are evolving their brand. At the beginning of 2021, the company announced a $105 million equity investment in a development project in Aspen, where it is planning a new guesthouse and, more broadly, a new "RH ecosystem" that will include residences, restaurants, a spa, etc. It hasn't opened yet, but RH does now have a guesthouse in New York. To be clear, it is not a hotel:
So what is RH trying to do with all this?
Surface Magazine recently argued that they are trying to become the "public" version of Soho House. That is, a lifestyle omni-brand that isn't membership-based, but that will still make you feel rich and special while you eat, sleep, play, and shop for various things for your home. Now, I do think that their target customers aren't exactly the same person. But of course, I see the parallels. And it's certainly interesting from an experiential retail, brand ecosystem, and real estate development standpoint. It gets the brand everywhere.
But perhaps the main reason is that, as an industry, we have never really succeeded at making buildings a product (architects sometimes despise when you call buildings this). It is for this reason that every building can feel like a prototype and that prefabrication remains this dream that never seems to become a reality. A product implies something repeatable and producible at scale. And buildings are generally not that. Every market and site are unique.
All of this said, there are ways that developers are building meaningful brands for themselves.
The first way is to obviously focus on building your own brand alongside or in lieu of strong project brands. One example of this is Toronto-based Urban Capital. They build a specific kind of condominium building/product and, to the extent that it's possible, it doesn't change whether they're building in Saskatoon or in Halifax. David Wex, one of the partners, describes this as branded vs. opportunistic real estate development.
Another example is Toronto-based Fitzrovia (which I wrote about, here). They are one of if not the most active rental developers in the city. And if you go into one of their apartment buildings, you'll find the same No. 10 Dean coffee shop and bar in the lobby; the same rooftop pool (called LIDO); the same gym (called The Temple); and the list goes on. Their goal is to build a consistent and hospitality-like experience for apartments.
The second way to go about building a brand is to make it so attractive that other developers will pay you to use it. The best example that I can think of is London-based YOO. A partnership between John Hitchcox (a developer) and famed designer Philippe Starck, they have built a business out of creating branded residences for third-party developer clients. And this is in some ways the holy grail of development: you get paid without taking on the risk of building.
Of course, this same licensing model is also used with hotels. And hotel brands are globally the most common kind of branded residence. What this obviously tells us is that brands matter a great deal in real estate. They matter so much that developers will pay to use the right one, because it will likely command a premium and it will likely increase sales/leasing velocity.
It is for this reason that I've always felt it important to grow the parent brand alongside any project-level brands. And it's why we never bother creating new social accounts for our individual development projects. Brand building takes time. If you're going to invest time and money into one, why not take advantage of the compounding at the very top of the house.
One way to define "brand" is that it is "the sum of how a product or business is perceived by those who experience it." And it's a pretty awesome construct when you stop to think about it. Because if I perceive one brand to be superior to another -- which might just mean that it better matches my sense of self -- then there's a good chance I'd be willing to pay more for that brand.
And if I happen to own a brand that people perceive to be valuable, then I can also monetize this brand by lending it out to other people for money.
I am not the target market for Restoration Hardware, I mean RH. But I do think it is interesting the way they are evolving their brand. At the beginning of 2021, the company announced a $105 million equity investment in a development project in Aspen, where it is planning a new guesthouse and, more broadly, a new "RH ecosystem" that will include residences, restaurants, a spa, etc. It hasn't opened yet, but RH does now have a guesthouse in New York. To be clear, it is not a hotel:
So what is RH trying to do with all this?
Surface Magazine recently argued that they are trying to become the "public" version of Soho House. That is, a lifestyle omni-brand that isn't membership-based, but that will still make you feel rich and special while you eat, sleep, play, and shop for various things for your home. Now, I do think that their target customers aren't exactly the same person. But of course, I see the parallels. And it's certainly interesting from an experiential retail, brand ecosystem, and real estate development standpoint. It gets the brand everywhere.
It is for this reason that in the world of real estate development there is something known as branded residences. Broadly speaking, it involves a pretty simple trade. Person 1 has a brand that lots of people perceive to be desirable. Person 2 has real estate that it is looking to sell, but it doesn't have a brand with the same kind of cachet as person 1.
So what happens is that person 1 offers the following trade to person 2: pay me $X (upfront and/or over time) and then I will let you use my highly coveted brand to sell your real estate. And hopefully you won't screw it up by doing weird things with it. (But other than this, person 1 isn't really taking on much risk with this trade.)
Because person 2 believes that they'll be able to sell their real estate for more money and/or faster than without the brand, it gladly accepts the trade. And as long as the benefit it gains is, in fact, greater than the cost of using the brand, it should be a good trade and both person 1 and person 2 should be happy with the outcome.
Now here's an actual example. Earlier this month, the proposed Baccarat Hotel and Residences in Dubai set a new pre-construction pricing record when it sold a ~14,507 square foot apartment for 203.1 million dirhams (or US$55.3 million). For those of you who are wondering, this works out to be about US$3,812 psf.
Supposedly this is the most that anyone has ever paid for a new place in Dubai, and there's a strong argument to be made that the developer got this pricing because it was a branded residence.
It is for this reason that in the world of real estate development there is something known as branded residences. Broadly speaking, it involves a pretty simple trade. Person 1 has a brand that lots of people perceive to be desirable. Person 2 has real estate that it is looking to sell, but it doesn't have a brand with the same kind of cachet as person 1.
So what happens is that person 1 offers the following trade to person 2: pay me $X (upfront and/or over time) and then I will let you use my highly coveted brand to sell your real estate. And hopefully you won't screw it up by doing weird things with it. (But other than this, person 1 isn't really taking on much risk with this trade.)
Because person 2 believes that they'll be able to sell their real estate for more money and/or faster than without the brand, it gladly accepts the trade. And as long as the benefit it gains is, in fact, greater than the cost of using the brand, it should be a good trade and both person 1 and person 2 should be happy with the outcome.
Now here's an actual example. Earlier this month, the proposed Baccarat Hotel and Residences in Dubai set a new pre-construction pricing record when it sold a ~14,507 square foot apartment for 203.1 million dirhams (or US$55.3 million). For those of you who are wondering, this works out to be about US$3,812 psf.
Supposedly this is the most that anyone has ever paid for a new place in Dubai, and there's a strong argument to be made that the developer got this pricing because it was a branded residence.
