Can real estate be branded?

Copyright: David Lawson – appeared Property Week July 1999

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Pick up a can of Coke and a McDonalds in Budapest and you might just as well be in Manhattan. Some products are comfortingly identical wherever you go. So why can't buildings  have a consistent brand?

  On  one seemingly endless trans-Atlantic flight a few years ago a companion pursued that question until it became a drone louder than the engines. As vice-president in charge of something important back in the US he was tasked to find new UK premises.  'It should be like the Hilton,' he moaned. 'I know what to expect no matter where I am.'

  Some of the biggest UK agents have bent to this force. Richard Ellis, Jones Lang and Hillier Parker are among leading firms which justify US mergers as a brand-building exercise. They want big occupiers to identify their names with a consistent standard wherever they settle.

  Landlords are now musing about trying a similar approach. 'This industry is going through a revolution as leases shorten and occupiers are more footloose,' says John Andersen, chief executive of Burford. 'You have to develop an attraction that will keep them coming back.'

  Does that mean developers' names will appear on buildings? Will neon lights flash over Burford distribution parks, Grosvenor shopping centres and Hammerson office towers? It seems unlikely.  Landmarks like the US Trump Tower are considered a triumph of ego rather than economics. In fact, most  memorable buildings named after the occupier, such as the Chrysler building.

 'We have discussed the idea that there should be a Hammerson building but realised that occupiers are not interested in seeing the landlord's name dominating their own,' points out marketing director Chris Smith.

  Branding might be  vital for property companies to compete in an uncertain future but one of the big problems in assessing its importance is defining exactly what the process  involves. On one level, it is a label on a single product. 'Canary Wharf is a hugely powerful brand,' says Stephen Clues, marketing director of Richard Ellis St Quintin. 'It offers a perception of a revolution in office development. Broadgate is another.'

 Bluewater shopping centre is another powerful brand name, giving out a message about large-scale, comfortable retailing.

  But a brand is more than a name. It is a management process.  'I come from a school of business where branding and management are everything,' says Andersen, who joined Burford from Ladbroke.

 Burford's Trocadero leisure centre in central London, for instance, is being turned from a jumble of buildings with a confused identity into a single entity via unified colour schemes and new signage. Mayfair Place, a West End office development, is getting similar treatment.

 The next stage is deciding whether a brand can be reproduced. Buildings are not like cans of Coke, says Smith. 'Providing the same look or feel to an office block no matter where you are is neither feasible nor appropriate.'

 Even slapping the same brand name on developments has pitfalls.  Capital & Regional considered the idea for  shopping centre it bought in Barnsley. 'The Alhambra seemed a bit like a music hall joke,' says managing director Martin Barber. But research showed how much affection customers felt for the name.

 He is still considering whether there might be some benefit to attaching the C&R label ahead of the name of each shopping centre. 'But the vital thing is to identify the company name with a standard of service behind the  product,' he says.

 This is the third aspect of  branding, involving  a more subtle and complex process than uniformity of labelling.  It involves building loyalty so a tenant will take space because it identifies the company  with treatment in a different development.

 Heywood Park in Manchester was branded  by Burford by provision of secure areas for tenants. This generated a 'caring management' image which has helped generate interest from tenants in other schemes such as  the firm's  Cabot Park, in Bristol.

 Grosvenor Estate is one of the few major developers with a history of putting its name on buildings, including UK  shopping centres  and office blocks in Vancouver and Hawaii. But that is because it has such a long history,  stretching back to an era when this was  the fashion.

  'A development should reflect our management values without needing the label,' says marketing director Jane Sanders. Everything the 300-year-old company does is geared to emphasising its perceived strengths - integrity, quality and long-term care. But that does not mean parading a brand of historic-looking designs.

 'We do modern buildings as well,' she says.  'But any visual image  is only part of an effort  to create a brand of less tangible elements which make up a message to the occupier: We are not going to build this and then dump you. '

  Barber says some cutting-edge developers are exceptional because they create a market and their name becomes a brand. Arlington, which he  recommended  PRICOA to take over became synonymous with  big, greenfield business parks. This brand has   evolved, however,  into a management style based on  an almost patriarchal concern for occupiers involving areas such as flexible leasing and provision of services.

  The takeover snuffed out one burning question, however. Does a brand have a hard price? Wall Street attaches billions of dollars to Coca-Cola for the value of its brand name. Retailers like Marks & Spencer are treated the same over here. If Arlington had been floated, the prospectus would have been examined in detail for indications of its premium value over any other business park developer.

  We have yet to see similar treatment in property company accounts, however. 'It can take decades to develop a strong brand,' explains Barber. But it could be argued that brands already play a part. City analysts generally apply their own judgement to the way each company is run.

 If brands genuinely reflect management style as claimed, they are already factored into share prices as much as the asset values and rent flows.

· Two emerging sectors are revealing how branding can play an important part in certain kinds of property.  Regus is a prime example of a brand stretching across hundreds of locations and buildings around the world. Mark Dixon's multi-million-pound company has grown out of nowhere in five years by pioneering high-quality  serviced offices. 'They are like the Hilton,' says one investor. 'You know what you are going to get wherever you are.'

 That is where the break has been made with conventional offices, which defy overt branding by name or look. 'They are essentially an hotel operation. Ironically, the major competitor in this field, HQ Centres, eschews the flags and logos which are so much part of the Regus package, opting for anonymity. Chief executive Peter Kershaw says occupiers do not want to be upstaged by the owner's name.

 Leisure is another growth area where overt branding is making its mark. Heron Group is planning a chain of branded centres around the capitals of Europe. Putting the name of Britain's largest private developer on the gate will be nothing new. It used to do the same on UK office blocks in an era when this was fashionable.

  Martin Barber of Capital & Regional has similar, if less ambitious,  plans for Continental expansion, although he is likely to favour Xscape rather than the company name. This is being established in Milton Keynes as a  snow centre concept. He is looking at sites for the  brand in Belgium and Germany.

 There is also room for one more  Xscape in the UK, possibly in Glasgow. Coincidentally, John Andersen of Burford says he would have little problem reproducing the firm's   London leisure centre called O2 into Sauchiehall Street.