Thanksgiving

We often give thanks for the things we are blessed with but I read this quote and wanted to share it as it to speaks to me about the spirit of Thanksgiving

Aspire not to have more, but to be more - Oscar Romero, Patron Saint of El Salvador

Live and Love Large this Thanksgiving.

Chris

Sigmund Freud and New York Real Estate

A State of Denial

It’s been a little while since my last post, since that time have had a number of meetings with developers and colleagues who work directly with sponsors.
Wish I had a great story to tell.

What we have found is that across the board there is still a huge number of developers and sponsors who are in denial when it comes to their projects.
And for those reading who like Sarah Palin think “de nile” is in Africa then let me refresh your memory via way of Wikipedia.

“Denial is a defense mechanism postulated by Sigmund Freud, in which a person is faced with a fact that is too uncomfortable to accept and rejects it instead, insisting that it is not true despite what may be overwhelming evidence.”

What has this got to do with Real Estate?

Let me share one story that sums it up for me.

Recently I took a well qualified buyer to see a development that still has a third of its inventory unsold.

This project hasn’t sold almost anything in months but when it came to their pricing still wanted $2000+ a square foot!

Sure it was nice project, high floor great finishes but there is no ways in God’s green earth are they going to achieve anywhere remotely near that number.

(My guy was thinking "south of $1000 a foot)

Maybe they “can negotiate” you say…..well my experience is that any time opening positions are so far apart to begin with then the negotiation is destined to fail.

That is reality and research in the area of negotiation bears that point out.

If this was a one off story we all could just have a laugh but it isn’t.

All too often we hear “my project is different” “my project’s location set’s it apart” or “this is much higher quality than the competition”.

No one is immune to market forces those who don’t get a head of the curve when it comes to pricing i.e. cheaper than their competition and who can’t stand out and get qualified traffic in to see their inventory/product are going to get 100% of nothing rather than a percentage of something.

We are in the worst downturn in at least 15 years some say even longer that is our economic reality.

Cut your losses, reconsolidate, get some cash in, work with your lenders and prepare for the next round.

No point in continue to “fight” a battle you cannot win with a price point that was where the market use to be.

Those days are gone.

NYC's 3rd Quarter Results - Just the Numbers

The Bad News

 The number of sales dropped 24.1% from the prior year quarter to 2,654.
 Listing inventory increased 34.6% compared to the same period last
year to 7,003 units.
 The average days on market was 134days, 11 days longer than the 123 days of the prior year quarter.
 The listing discount increased modestly to 2.6% from a discount of 2.0% in the prior year quarter.

The Good News


 The average sales price of a Manhattan apartment remained above the $1,000,000 threshold.
 The average sales price increased 8.1% since the prior year quarter to $1,480,363.
 The median sales price increased 7.4% above the $864,397 median sales price achieved in the prior year quarter, reaching $928,263.
 The average price per square foot rose 4.3% over the same period last year to $1,193

More Facts

http://www.prudentialelliman.com/NYCPhotos/retail_reports/mmo2008q3locked.pdf

(Prepared by Jonathan Miller – NYC’s #1 Appraiser)

Applied Creativity 2008

This past Sunday the The New York Times ran an article that was about how brokers now had to get creative to “seduce buyers”.

DUH! – talk about being masters of the obvious!

Of course things need to be done differently we are only in the worst financial crisis of our era.

Some of the tactics sounded interesting and fun and like they achieved their preliminary objective which is to create more awareness.

What wasn’t directly stated was the fact that we are now are competing for fewer buyers than what previously existed and the first thing that needs to be done is catch their attention.Some brokers are hustling for their clients and going above and beyond.For those who are going the extra mile and trying something new and something that you haven’t done before then I applaud you.

A condo or a project needs to stand out from the pack, the more people know about your project the better.

Events, tours are great and necessary but where the game really needs to change is online – and that is where most agents are operating like its 2004 - time to retool, re skill and compete in a new arena.

Do what you’ve always done and today you won’t get what you use to get!

Blood in the Water

Lehman, Merrill, AIG - Wow! What a week!

I remember thinking just a few weeks ago how tough the economic climate was AND was even quoted in the NY Sun about my perception of where the real estate market was going and how tough it was.

BUT if you were to tell me that those 3 financial giants would be "hammered" so hard that they would either "dead" or unrecognizable then I would've thought you were high.

But the unthinkable happened, the market is fundamentally worse now so where does that leave you, your project and your strategy?

What's Plan B look like or is is C or D?

Where is the smart money going to go?

There is blood in the water and the sharks are circling - what are you going to do now?

Marketing Synergy 2.0

How should Websites, Advertising, Blogs and P.R. work together in this connected world?

How do you connect all of the pieces?

Quick Story

I saw this huge development the other day.
Impressive product, priced right, great amenities – the full page ad with a great headline which had an offer which made me want to go online and find out more.
Sounds great huh?

And when I did get online to see it, guess what I found?
Just their same old website/online brochure.
There was NOTHING in relation to their new advertising promotion.
NOTHING, NADA, ZIP, ZERO!

The Ad did its job – everything else was a failure.
The Website should have had at the very least a new page detailing the offer OR an ad to click through on the landing page OR even better a banner on all of their pages.

How about linking their existing site to their own blog?
A blog that is updated regularly and has video?
A blog which has all of the key team members contributing and shares with us why they are doing what they doing and what they love about it and the lifestyle that the new owners are going to have there.

They should be sharing the cool stories which are taking place now as it is going up.
People want more info not less and they are taking more time and becoming more informed.

And where was the P.R?
They had a full page ad in one of the major daily papers and there was no other “pick up” of the project! AND there are a lot of angles on that project that they could promote which leads me to believe that their P.R is either non-existent or lazy.

Outstanding!

The goal of advertising in 2008 is to drive them online!
Sales is a multiple contact sport – the more you “touch” the higher probability that they will remember you and take action AND once they do take action then your components/team better compliment and enhance each other.

Once you get their attention you better know what you are doing – producing a site then thinking your job done is a blue print for failure in sales.

Your project’s online life and strategy needs to be constantly reviewed and updated if you don’t do that then you are your own worst enemy and the architect for marketing and sales mediocrity.

Superior 2.0 strategy is straight forward IF you now how to play this new digital game.

The Truth about your Marketing

People judge you now faster than ever.

They form opinions about you and your project before you ever see them.

In this digital world they judge your project by the website alone.
Prospects will make multi million dollar decisions on what buildings to go see and what to miss based on your digital presence alone NOT on the how good the actual building is.

Sure not all of the time but do you want to gamble on what the percentage is by trying to save on the place/website where they form their first impression? - and where they have their first contact with you?

Do you realize that the paradigm has shifted? The consumer gets to make an opinion before he ever sets foot in your project, before he ever meets your sales person.

So what is your digital presence saying about you? about your projects?

And who is helping you get that piece of your business not only right but head and shoulders better than your competition?

What's their strategy to navigate this brave new 2.0 world?

Olympic Inspiration & Real Estate 2.0

This Ad for Visa by TWBA/Chiat/Day really got me thinking about innovation and in particular how Paradigm Shattering Dick Fosbury was and in my opinion still is.
Watch this if you haven't seen it already.





“The problem with something revolutionary like that was that most of the top athletes had invested so much time in their technique and approach was that they didn’t want to give it up, so they stuck with what they knew,” Fosbury said.

Sounds a lot like how most Real Estate Sales and Marketing Programs are currently conducted.

He said it took a full decade before the flop began to dominate the sport.

I’m hoping we can shift our industry faster than that.

You would have thought that all the other high jumpers and their coaches would have copied him because after all he did win the '68 Gold Medal and break the World Record.

They didn’t - the elite high jumpers and their coaches were too invested in the straddle.
They could not and would not undo all of the years of repetition and the results that they use to get with going with their old style, the Straddle.

Does that look or sound similar to our industry?

It certainly does to me as I see all of these new tools/skills/techniques that so few are using and I keep wondering why.

So what happened next in the High Jump World?
The establishment "attacked" him and his Flop - they were not going to have their paradigm shattered.

Check out this quote:

“Kids imitate champions,” said U.S. Olympic coach Payton Jordan at the time. “If they try to imitate Fosbury, he will wipe out an entire generation of high jumpers because they will all have broken necks.”

Fosbury laughed long and hard when reminded of that quote and then said:

"There were some doctors who felt I was threatening kids’ lives".

His stunning, and almost comical, break with the conventional straddle high jump sparked a revolution in the sport.

Today, the “Fosbury Flop” is the standard technique for high jumpers from high school to the Olympics.

But Fosbury still recalls the debate that raged in the press over his radical approach to the bar.

So what are you doing to shatter the paradigms in your industry, are you trying new approaches or are you happy to continue to do the “Straddle”

Good news for people who love bad news!

Today’s article in the The New York Sun is about how the NYC Condo Market is performing.

And yes I’m quoted heavily in the article and I don’t paint a pretty picture - but we do need to look at the current “landscape” objectively and realistically.

We need to make decisions on how things actually are right now.
Not how we want or need them to be based on what happened previously or where we were hoping the market was going to go.

Looking way back to Zeno and Socrates for a more stoic approach to the market and one that helps me is that “we should try and maintain an attitude of equanimity in the face of life's highs and lows - getting carried away by neither”.

Easier said than done but it is the goal - because according to Zeno " man conquers the world by conquering himself " and we can do that by conquering how we react to all external factors.

(both the good ones as well as the bad)

Focus on what we can control, work hard on those items and leave the rest in the hands of the gods.

The Stockdale Paradox

The "Stockdale Paradox" - was named by Jim Collins in his book "Good to Great" - and he sums it up this way: "You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they may be." This quote is attributed to the famed POW Jim Stockdale.

I thought of this quote in response to the following article by my friend Michael Stoler in today’s New York Sun.
He is absolutely right about what he is saying about the current market and trust me he isn’t the kind of person to mince words.

My experience shows me that most people do not value what they learn for free and make no mistake some people are paying a heavy price and it isn't just the mom's and pop's, the big boys are feeling the pain too.

Right now a lot of us in the Real Estate Industry are getting some pretty expensive “tuition” from this market and the “lessons” are far from over. (The picture BTW is the Tibetan Circle of Punishment - which sums up my view of what the market is doing to some of us)

Hearing the true state of the market is exactly what consumers need to hear from real estate agents and brokers.

Real estate markets go up and they go down.
The scope and size of this financial crisis does bring a new dimension to this particular cycle, but we will get through it and the smart ones will learn from it and the really smart ones will do even better because they were already a head of the curve in the first place.

Six degrees of separation - (the 29%)

You’ve heard the term but what does it really mean?

It comes from a social experiment conducted by Stanley Milgram in the 70’s and it’s objective was to see how many people would need to “touch” a letter to get it from one person in the mid west to a complete stranger in Boston.

http://en.wikipedia.org/wiki/Small_world_phenomenon


The rules were you couldn’t call them direct and you had to send it a person who you personally knew who might be able to move the process forward. On average it took around six contacts to achieve that. Most people who are very social and especially salespeople think that they are only a few contacts away from making “it” all happen.

But it is a myth

Because only 29% actually got the letter through to their intended target – the rest failed.

The best ones in the survey who achieved it did it in 2-3 attempts and the weaker 8-10 connections.

With the average path length being 5.5 which got rounded up to 6, hence the term “six degrees of separation”.

Interesting story but what does that mean to you?

Think for a moment about your connections and what you need to grow your business.
How well connected are you?
And what about your Sales Team?

Can they get you in front of the customers who want and need your product?

Are you/they in the 29% who can connect to whoever they need to in order to get the job done?
Or are they in the 71% who couldn’t deliver?

What is your Social Networking strategy and what are you now doing differently to improve your “network” and your projects results?

Relaunching a Property Development

Re-launching a failed project should be done with a new team and a fresh approach.
A team that is untainted by the first failure.

Harsh words but true - however before you drop the axe on the old team, and before the new team emerges from their chrysalis you need to "harvest"the experience because what they learned is very valuable and can be helpful in the second launch and in the projects "next life".

Here are some but not all of the key questions that you would need to know before you “jump in”:

What are the costs and time needed to fix a product. (Yep -there may be few things that need to change)

What is the required capital investment to re-launch the product. (It is useless to think or say “well I’ve spent my entire marketing budget the first time and now have no money left”) Get creative – find a way to make it work for you and your new team.

What is the optimum pricing strategy (Painful I know because right now it usually means lowering not raising the prices but the market is now VERY different to the one in which you did your initial pro forma)

What is the current “appetite” of the different market segments to the re-launched product i.e. what are the prospects/consumers saying about your Studio’s, 1, 2, 3 Bedrooms, Penthouses, common areas, etc.

These questions and there answers will give you and your new team a better insight into

Why potential customers are not buying your product.
What the market segmentation is and what they now want.
Better understanding of what they value for each segment.

If I were running the re-introduction of [Property Development name removed] I’d run it like a product launch campaign, but with a few interesting (but profitable) variations.

· I’d change the product name to be more exciting, descriptive and different to what’s been used previously and what is currently out there.

· First priority would be an effective sales/informational website – with redesign and sales-driving content and new information.

· 2nd would be an informational blog that goes above and beyond what almost everyone else is doing. I would have streaming video content i.e. Vblogs from the Developer, Architect, GC, Interior Designer, Local Neighborhood Expert, etc. All talking about what is special and unique about this project and this location.

Why these two? Because they will cross-pollinate with each other by sending traffic back and forth to close more sales. Plus, the linking back and forth will drive you to the top of the search engines faster. All of that means is more sales.

3rd would be to have a new true “Blue Chip” brokerage firm put in place and replace the incumbent agency. They would focus on a “co-broker program” that gets it out and across all of their agents, branches and agencies in addition to a specific plan of attack to do that with all other competitor agencies.

Why? Because most sales are co-brokered and it is now all about how many people know and “get” your project.

It is absolutely useless to have just a handful of people who know it well – there is strength in numbers – make no mistake about that.
It’s not about “who you (your current brokers) know - It is about “How many people (brokers/potential customers) know you – AND it is now about how easily AND how much info that they can get beforehand.

Getting A Head Start with your Marketing Program

So why is there a picture of Jorge Perez and his new book at the top of my post?

Well I'll get to that in a moment.

But first off I am always shocked that not every developer in NYC is not taking advantage of the CPS-1 program that allows you to start testing ad marketing your project before your Condo Offering Plan is approved by the Attorney General.

My only conclusion is why they don't is that they don't know what it is.

I know Jorge would use it - read his book and you'll see why I say that.

So for those of you who focus on the construction side of the process and aren't that into the marketing side let me give you a "heads up"on this program.

CPS1 is shorthand for Cooperative Policy Statement 1, and it sets out the Attorney General's rules governing how a developer may test the market for a new building before filing the offering plan, and, for that matter, even before construction is completed.

The CPS1 period, which lasts 120 days but can be extended for an additional 60 days: ''This is so Developers can advertise and take names of people who are interested, but they cannot take money. They can talk about price ranges, but nothing specific. No reservations can be accepted; no deposits can be accepted, and all advertisements must be approved by the Office of the Attorney General.''

I'm not an Attorney so have your counsel check it out for you - but here's the link in the mean time.

http://www.oag.state.ny.us/realestate/policy/Cps1.pdf

So what you say?

Well the sooner you can start building the Buzz about your project the better.

According to one of the greatest Property Marketers Jorge Perez (He's the Southern Half, Chairman, CEO of the Related Group) The first things/principles you have to do according to Jorge is:

1. Develop Awareness

2. Build Interest

3. Create Desire

He has a few more steps so buy his book - but you get the idea right?

These things take time, creativity, skill and money to execute - So let's make sure from this point forward your team knows how to get you a head start and give you every possible advantage in this changing marketplace!

First Things First

Here is a scary statistic - 77% of all homebuyers start their search online.
And that is according to the National Association of REALTORS study of homebuyers and sellers back in 2005!

So in 2008 that number is probably low.

So when they find YOU and YOUR PROPERTY online what do they get?
The basics?
A few pictures, a rendering or two some basic neighborhood shots?
BORING! - Next!

If you are not engaging them online, if they want to talk OR are talking WHO is listening?
AND filling in a basic contact email on a basic brouchure style website that goes off to the unknown is absolutely average -so what are you going to do differently?

How will you differentiate yourself moving forward?

Innovator, Early Adopter or Laggard?

So where are YOU and your company on this Bell Curve when it comes to using new technology on the Sales and Marketing of your Company/Real Estate?

If your not sure what the Rogers Innovation Curve is all about maybe the below bullet points will provide a bit more clarity. (Or you can always Google it or Wikipedia it - like I usually do ;-)

• Innovators - the risk takers willing to take the initiative and time to try something new when it comes to building their business/project /property development
  


• Early Adopters - tend to be respected group and industry leaders, the individuals essential to adoption by whole group.
  


• Early Majority - the careful, safe, deliberate individuals unwilling to risk time or other resources until the trend is already irreversibly under way.
  


• Late Majority - those suspect of or resistant to change. Hard to move without significant influence and effort.
  


• Laggards - these are those who are consistent or even adamant in resisting change. Pressure is needed to force change and even then it is done reluctantly.

I find it's interesting to also see that there is a correlation between what developers build in regards to Green Building/LEED Certification and where they are on the Innovation Bell Curve with their marketing and sales programs.

What do you think? Am I on to something with that observation?

My opinion is this -Innovators and Early Adopters are always looking for advantages, looking for new ways to do "it" better than they have done previously and gain a competitive advantage - regardless of what part of the program we are looking at.

They are always trying to compete whether it is against someone else or their previous personal best.

So where are you on the curve?

What are you going to do differently to get a competitive advantage?

What is Web 2.0?

And how does that apply to me?

Well first off I like this definition which I have "lifted" from Wikipedia which is:

"Web 2.0 is a term describing the trend in the use of World Wide Web technology and web design that aims to enhance creativity, information sharing, and, most notably, collaboration among users. These concepts have led to the development and evolution of web-based communities and hosted services, such as social-networking sites, wikis, folksonomies and blogs."

Web 2.0 is a term describing the trend in the use of World Wide Web technology and web design that aims to enhance creativity, information sharing, and, most notably, collaboration among users. These concepts have led to the development and evolution of web-based communities and hosted services, such as social-networking sites, wikis, folksonomies and blogs.

Watch this video - it is a little bit techie but it is going to give you some more background to this wave of change that is happening to our businesses.



This applies to you because people(your customers) have access to more information than they have ever had before, they are talking about your project, they are voicing and sharing opinions and they are making decisions before you or your people ever get face to face with them.

Do you know what they are saying?
Are you involved in the conversation?
Do you have an active voice in the marketplace with these customers and prospects?

Or are you of the mind set that "We have a website, and we have the brouchure and thats all they need to know" AND the Sales People should just be selling it - because my project is "unique" !

I've got news for you - those days my friend are gone - and to paraphrase from a a popular business book from last century - that cheese has moved.

YES you still need to execute the basics well i.e. the Corporate Identity of the Project, Branding, Marketing Collateral (Physical and Digital) Launch Event, Media Strategy, P.R., Have a strong Sales Program with Great Sales People BUT you need to do more if you want to break free of the competition and be an innovator and not just another follower.

Specifics you say? We are getting there......but we need to have the foundation in place first and to mix metaphors - so we can be all on the same page ( at least to start with)

And yes we are getting to the Real Estate Specific stuff real soon ;-)

Why 2.0

Why Real Estate 2.0?

Why do we need a different approach to how we market our Real Estate Projects?

I'll get to that in a second but first off would you agree that the Real Estate Market in NYC is in a state of flux? and that there is a lot of different perspectives about what is happening out there? And most importantly where we are headed.

Here are some of the latest facts regarding the secound quarter of 08 in NYC.
These numbers come from Jonathan Miller of the Real Estate Appraisal firm Miller Samuel:

• Prices were at or near record levels: Median Sales Price $1.025M, up 14.5%.


• After excluding 15 CPW/The Plaza: Median Sales Price $995K, up 11.2%.


• Number of sales fell 21.8% from 2Q 07. 2Q 07 had the highest total recorded sales for this report.


• Current sales levels are 27.6% above 5-year quarterly average of 2,413.


• Listing inventory 6,869 units, 31.2% higher than last year.


• Inventory is 10.9% below same period 2 years ago.


• Luxury inventory 31.5% below same period last year.


• Days on market was 135 days, 2.5 weeks longer than last year.


• Listing discount was 3.6%, up from 2.2% last year


• The full report is below:

http://www.prudentialelliman.com/NYCPhotos/retail_reports/mmo2008q2locked.pdf

So if the market is in a state of such dynamic change locally (let's forget about the national scene for a moment) Then why is practically everyone doing the same thing when it comes to their Sales and Marketing Program?

Why is everyone Marketing and Selling like it is 2004-07?

(like my picture above - which is dated but classic - Fine for photography not so hot for strategy)

How many Agency's and their Agents's get the quantum shift that is happening in Marketing with the rise of the Web 2.0 Approach?

Well having been on the front lines I could probably count on my fingers (OK maybe I might have to take of a shoe ) and count how many:

A. Get it and

B. Are actually doing it for either themselves or their clients

That is a pretty huge statement considering that there are over 75,000+ Real Estate agents in the greater NYC area.

So what should they also be incorporating into their S & M programs? and what do they need to do to evolve their game?

Well stay tuned and in my next post i'll tell you.