Marketers have an old saying: "Nothing happens until somebody sells something." But while that old saying might bring lots of applause at sales meetings, the fact of the matter is this: Nobody can sell anything until somebody figures out what, and to whom, they're selling.
Enter the strategic plan, a pre-sales strategy that marketers in virtually every business develop before doing any marketing at all; no ads are created, no deals are made, until the product has been evaluated objectively and its exact place within the market defined. That is the only way, experts agree, that a product can be priced, positioned, and presented effectively.
Among real estate marketing professionals a similar strategy prevails. Indeed, before targeting any prospects or making any repairs or improvements to a property in the hope of luring tenants, most property owners and managers are sitting down with marketers and other experts to develop a comprehensive analysis of every property they handle.
According to Ken Erdman, a property manager with Trizec Properties Limited, Alberta, Canada, strategic plans have become the rule, not the exception, in today's real estate markets. "A strategic plan is simply a necessity just to survive right now," he says. "It's a necessity to get and keep your staff working in the same direction."
Erdman contends that strategic planning is the key to effective use of managers' resources, both human and cash. "No longer does the title to a property guarantee uninterrupted cash flow," he says. "The reality is that only a total commitment to marketing the building will keep your tenant." And a strategic plan is crucial to effective marketing: "It teaches you how to be an attacker, rather than a defender, of your building's market share."
Managers should regard strategic planning as a necessary stop on the marketing path: developing a game plan before spending money or possibly wasting effort on a misguided attack. According to James Mullahy, president of The Mullahy Company, a real estate marketing consulting firm based in Philadelphia, the strategic plan helps managers answer one simple question: "'Why should somebody want to lease here?' When you can answer that question," he says, "then you're getting close."
Wade Greene, senior vice president and director of marketing for Rubloff, Inc., Houston, suggests that a good strategic plan will help managers better serve both tenants and owners.
"We get everybody involved in developing a plan for positioning an asset in the marketplace and coordinating all of our strategies," he says. "It becomes a working document that just makes for better communication between ownership and management."
An effective strategic plan has several components, including an objective evaluation of the property and an in-depth analysis of competing properties. In addition, the plan should contain some numbers: rent structures, a line-item evaluation of the property's budget, and capital market information. Some experts also are recommending that managers take a close look at a property's tenant profile in order to better understand its appeal to tenants or tenant companies.
ASSESSING THE PROPERTY
At the heart of any strategic plan is a thorough analysis of a building's facilities and amenities.
"Step one is to study the product," says Josh N. Kuriloff, a director with Cushman & Wakefield, New York City. "In order to know how to compete against the other properties that a prospective tenant may be looking at, you have to look at the strengths and weaknesses of your real estate. This, to me, is the most important part of strategic planning."
The first evaluation should be of the building's technical and architectural capacities, Kuriloff says. These include its HVAC systems, elevators, floorplans, ceiling heights, number of windows, bathroom facilities, and power availability.
"We have people physically walk into our buildings with a checklist of these things," he says. …