Campbell soup, Coca-Cola, Juicy Fruit gum, Aunt Jemima and Quaker Oats were among the first products to be branded. But the multifamily world didn’t get into the trademark game until the latter part of the century.
Multifamily branding pioneer Post Properties has been cultivating its brand name since 1971 and believes that promotion has been integral to the company’s success. That success was rooted in the REIT’s renowned reputation for high-quality assets and lavish landscaping.
Post is well known for the spectacular, colorful array of tulips, which are reflected in Post’s tulip logo, and other bulbs that blossom at many of the company’s properties each spring.
A couple of years ago, the Atlanta-based REIT launched a new brand for its for-sale housing business–Post Preferred Homes– to differentiate its condo development and conversion business from its rental portfolio, while capitalizing on the company’s brand heritage.
Leading multifamily consultant Christopher Lee, CEO of California- based CEL & Associates, Inc., breaks the branding concept into four categories–brand awareness, brand association, brand loyalty and perceived brand quality. Post Preferred Homes fits perfectly in the brand association category, which will work in the multifamily space when one entity, like Post’s for-sale division, can bask in the reflected glory of a larger entity, like the reputation as a luxury apartment REIT Post has established in the multifamily space.
Association also works for properties located in prestigious master- planned communities like Atlantic Station in Post’s home town, or Celebration, which plays off of Disney World’s popularity in Orlando, Lee said. If it’s Atlantic Station, it’s classy and hip and new, and, if it’s in Celebration, it’s sure to be fun.
Recently, celebrities are bringing cachet to the multifamily space, with basketball greats like Magic Johnson and Shaquille O’Neal backing affordable housing efforts on both coasts and actor Brad Pitt joining the effort to rebuild New Orleans housing lost to Katrina by helping create and judge a contest designed to encourage green building in the hurricane ravaged areas.
In 1994, AMLI Residential made brand awareness a priority, re-christening all of its communities to include the AMLI name. The slogan, “Operate like a retailer. Think like a brand,” was coined to help the REIT focus its attention on increasing the power of its name. Positive brand awareness, or brand recognition, is achieved only if a product enjoys a critical mass of positive sentiment in its marketplace.
“Brand loyalty is probably the element that provides the greatest opportunity for the multifamily industry,” Lee said, explaining that if an apartment company is able to demonstrate the highest level of service and attention to the residents, the loyalty that effort inspires pays off in increased resident retention and the likelihood that, if the loyal renter must relocate, he or she is likely to move to another property managed by the company the customer has come to trust. That’s when you see perceived brand quality in action.
“When you have those four primary drivers in place, that creates brand equity,” Lee said. “Brand equity will manifest itself in higher rents, lower cap rates and an increase in overall enterprise value because people are loyal to that brand and the market values stabilized, sustainable performance.”
And, they’ll be less concerned about paying a bit more for an apartment managed by a company they’ve come to associate with quality service and functionality than they might for an equivalent, but less expensive unit, run by an unknown entity, he said.
“When you go into Starbucks for coffee, you know it’ll be the same in Pittsburgh as it is in Seattle. Brand equity manifests itself because at Starbucks, they charge you premium for that cup of coffee, but you’re buying it because of the brand that has been created. This same loyalty can be created within geo-centric multifamily portfolios,” said Lee.
New York-based corporate identity specialist Lippincott & Margulies, which helped launch the Starbucks brand, also came up with the Archstone moniker that in 1997 replaced the former clunky Security Capital Pacific Trust, a name that reflected a number of mergers the company saw in the 1990s. With the adoption of its new name, Archstone was recognized as the industry’s first national brand, although the more regional, Southeast-focused Post Properties always will hold the title of ground-breaker in the branding game in the multifamily sector. When Archstone merged with Charles E. Smith’s residential division in 2001, the REIT incorporated the Smith name into its own, becoming Archstone-Smith.
Trammell Crow Residential, founded in 1977, followed close on the heels of the introduction of Archstone’s new name and logo with the launch of its Alexan brand around 10 years ago.
“We felt that, by building consistently high-quality projects and having consistently high service, and doing that across the country, we would pick up some incremental occupancy,” TCR CEO Ron Terwilliger said recently, adding that economies in marketing and marketing materials are another benefit of the successful branding effort.
Having a good management company, Terwilliger believes, is essential to the promotion of any multifamily company’s brand, which both he and Lee agree is fostered by providing quality service to residents. TCR’s former management team, Trammell Crow Residential Services, was purchased in October 2005 by the division’s former COOs Christy Freeland and Terry Danner, allowing TCR to focus more closely on its development and construction operations for both multifamily rental and for-sale product. The newly-formed management firm was christened Riverstone Residential Group a month later and continues to manage most of TCR’s assets.
Because Terwilliger believes so strongly that high quality service is essential to a multifamily brand’s reputation, TCR requires that investors who buy communities the company builds remove the Alexan name, unless Riverstone continues as manager. “When we had our own management company, as long as we continued to manage a community after it was sold, we would leave the Alexan brand on. Now, in some cases, we’ve compromised with buyers, leaving the brand on as long as Riverstone manages it, because we know the quality of that management company,” he said.
And, acknowledging that Post Properties’ branding strategy has proven its worth over the past 36 years, Terwilliger, who took over the reins as CEO and chairman of TCR in 1986. said, “They did such a good job over a period of years that I wished we’d done it from the outset, but my predecessor didn’t chose to do it and, obviously, it took me a while to get around to it.”
Like Post, AMLI and Archstone, TCR execs were acting on the belief that not only market-rate renters, but also top-notch employees would be attracted to companies known not just for their expertise at building and owning upscale apartments, but also a high level of service.
“The corporate image represented by the AMLI brand allows each of our employees to be part of a positive work environment, which will, over time, result in lower employee turnover and more dedication to profitability,” CEO Greg Mutz explained when the REIT’s brand-focus initiative was introduced in 1994. “Employees who have worked in the apartment industry have historically demonstrated very little corporate commitment. They were often employed by a single property bearing its own name and identity. Working for a public operating company committed to long-term profitability offers an employee more career opportunities,” Mutz said.
Lee agreed, saying, “Employees want to be associated with a good brand. So, when you say, ‘I’m working for Bank of America or Disneyland or Microsoft,’ other people tend to respond, ‘That’s a great firm. I’ve heard a lot of good things about them.'”
“That is a subtle psychological boost to the recipient of that message, who thinks, ‘Hey, I’m with a good company, so I’ve made a very good choice and, therefore, I feel good about me.’ So branding does help with recruiting and retention of people,” he said.
And, it’s quality of service and environment that establishes that brand reputation, not necessarily the logo, name or company motto, no matter how creative. “The brand is something that is inherent in the relationship that a property and the people who run it have with the residents,” Lee said.
Whether a prospective renter is a member of the baby boomer generation or that demographic’s children, the Y generation, or somewhere in between, brand focus need not be mutually exclusive, unless you’re talking about an age-restricted community or a student property. All age groups share the same kind of time limitations and desire for hours of operation that fit their tight schedules. And all of them are more likely to rent an apartment at a community where there is a welcoming environment, the amenities are in good shape, and there is a feeling of “we care,” he said.
“Within each generation–whether it be boomer, X or Y–the definition of quality may be very different, but all want good quality and service. Baby boomers may say, ‘Where can I store my golf clubs?’ and a member of Generation Y may wonder, ‘Where can I store my bike?’but they’re both storing a hobby.
“CEL and Associates, Inc., conducts two million customer opinion surveys a year within the real estate industry and we have consistently found over the past decade that residents who have good relationships with their onsite team will overlook a lot of other things. When we ask why they located to that property, the predominant reason tends to be location and third or fourth on the list is how they were treated when they arrived,” he said.
“The process of branding begins with a resident’s first impression of a property and continues through their entire residency. If multifamily owners and operators execute the four elements of branding –awareness, association, loyalty and quality–successfully, the prospects for a better performing and more highly valued asset increase significantly,” said Lee.
