The residential market boom is altering the way new projects are marketed to an apparently insatiable customer base.
There is stiff competition in the new development marketing field in Manhattan, as most large brokerages offer up specialist divisions for project marketing and some brokers take the plunge into business for themselves by opening boutique marketing firms.
Developers have speed on their minds, both in building their projects and especially in selling them before the last window is in place.
It’s led to a somewhat contradictory truism, says Michael Shvo, president of Shvo Marketing.
While many developers are taking on more upscale development in pioneer neighborhoods in Manhattan and emerging markets in other boroughs, that’s actually slowing the marketing process down a bit, he says.
The flood of new projects has had the unforeseen effect of back logging state attorney general approvals.
And Shvo says he doesn’t let overeager developers push him to market, though the pressure is steady.
“There’s always pressure to come to market, because developers want to sell,” he says. “But there’s also pressure to get the right things to market. We never push to get out to the market until a project is 100 percent ready.”
Dawn Tsien, who is the president of Coldwell Banker Hunt Kennedy’s new development marketing division, which opened a few months ago, agrees that developers may push to get to market, but it’s important to have all elements of the marketing strategy completed. That means knowing floor plans and finishes, and having a model apartment or vignettes of the kitchen and bath.
She says she won’t sell off floor plans, an activity that’s become a media symbol of a ridiculously ex-pensive real estate market in New York City. “There are developments that would sell off of floor plans, but that’s much less common and depends on the size of the development and location,” she says.
Nancy Packes, the president of the newly-formed project marketing division at Brown Harris Stevens, agrees the market has heated up, although the pace of development in New York lags other regions of the country or even the boom of the 1980s in New York City. With the amount of new development, marketers are scurrying to differentiate their product, creating discrete branded identities for their developments, an attempt to produce distinctive sizzle before the steak has even hit the grill.
“Today every project is less of a real estate deal, and more of a branding deal,” says Shvo. “There’s so much coming to the market to-day, we believe that every project must have its unique spin.”
Shvo Marketing is itself a new boutique creation, formed after he split from Prudential Douglas Elliman. The firm is now handling 16 projects, such as 206 East 95th Street and 20 Pine Street. Another Elliman top broker, Shaun Osher, recently left the company to form his own boutique marketing firm (see story in this issue). Project marketing today “is more about giving an identity and a personality to the project, from the finishes to the layouts to the marketing material and amenities even to bringing in designers who are new to the market,” Shvo says.
Packes agrees that contemporary marketing strategies in Manhattan focus on a lifestyle as much as a property.
“I’m not saying every project is the same,” says Packes, who has two decades of experience working with project developers. “If you’ve got a small building, naturally it isn’t going to be able to provide the same amenities as a big building.”
“But within the similarly sized buildings in different areas, you’re going to find basically the same kind of finishes and amenities.
So the frontier has moved to architectural signatures and to lifestyle amenities.” The brokerages seeking project marketing business face stiff competition, which increasingly comes from the project developers themselves, as creators of large-scale projects develop their own marketing divisions.
Kenneth Horn, president and principal of Alchemy Properties, which has developed 19 projects in Manhattan and is working on one in Brooklyn, says he feels his firm can market its own projects successfully, inviting brokers to bring in buyers and splitting the commission.
An April 8 open house attended by more than 1,000 brokers at 121 West 19th Street sold out the building’s 66 units in under a month. Of the $95-million sell-out, if $100,000 is spent on marketing, that would be a lot, Horn says. “We find if we market internally, we can control costs, and get it out to market in a manner that’s probably a little more effective than a large firm trying to market it,” Horn says.
“A lot of the large firms are not necessarily eager to co-broke.”
But project marketers at boutique and larger firms say they have the same priorities as the developers they support.
Shvo says he realizes the less spent on marketing, the more the developer and his firm benefit. He estimates current marketing bud-gets run from 2 to 5 percent of the project cost.
“The idea is not to spend money if it’s not necessary,” he says.