As far as buzzwords go, the term ‘experiential’ is popping up everywhere – and it has been used to describe anything from retail, to tourism offerings, and even the workplace.
Indeed, evolving consumer expectations and an increasingly competitive landscape have contributed to the increasing emphasis on “experiences” across the real estate sector. While investing in physical infrastructure remains important, developers are actively stepping up on efforts to improve ‘software’ by introducing new events and activities at their properties.
Effective events and activities programming – more on this later - will help to create moments of surprise and delight that makes a destination memorable, and in turn successful.
Stand out from the crowd
In cities around the world, developers are seeking to create unique destinations that will stand out from the crowd. Investments in leisure, culture, and entertainment uses can act as a key feature and point of difference.
In a recent report, Colliers International noted that destination experiences have the potential to add value to mixed-use projects in a variety of ways. The commercial rationale tends to revolve around three main points: a) attract additional footfall; b) enhance destination image; and c) help to secure planning approvals, government buy-in and community support.
Colliers’ director of destination consulting, Chris Wright, said, “In our experience, however, the standard approach to delivering visitor attractions within commercial developments sometimes fails to maximise these opportunities. A typical approach is to identify a space within a master plan for a leisure or cultural use and then to task the leasing team with finding the best tenant. This process inevitably favours well-known leisure concepts that are backed by operators with a strong track record.”
Creating a truly innovative and unique visitor experience frequently entails going outside the box. “Delivering on this objective takes vision and imagination, as well as an appetite for greater risk,” Mr. Wright added.
Choosing the right options
The Colliers report further showcased a diagram which maps a range of different leisure experiences along two axes: capital vs. operational expenditure and landlord vs. operator investment. To this end, Mr. Wright opined that understanding which part of the quadrant a project falls is key to ensure the viability of any destination.
The bottom right quadrant of the diagram shows examples of commercial leisure attractions. These options can usually be delivered and operated by a partner on a long lease, typically with some level of developer/landowner co-investment.
The examples in the bottom left quadrant are large-scale attractions that require substantial upfront capital investment. The biggest shopping malls in Asia and the Middle East have moved in this direction by incorporating signature attractions such as aquariums and indoor snow parks.
Located in the top half of the diagram are programme-driven experiences weighted more towards investment in on-going operations as opposed to capital-intensive facilities. These experiences require changing content to operate successfully.
Programming for change
Colliers observed that programmes of events and activities –whether indoors or outdoors –have some obvious advantages. Short term pop-ups and activations help to drive repeat visits, are flexible and can be quickly tailored in response to performance and audience feedback. This can enable more responsive, experimental and varied approaches than investing in fixed attractions.
However, curating a successful events and activities programme that will motivate visits throughout the year is no easy task. It requires a commitment to long-term investment in operations and delivery, including set-up costs to recruit and train a high-quality staff team and/or management fees.
That said, while a developer or asset manager will normally take the lead, there are often opportunities to involve partners in individual initiatives and to seek co-investment (both financial and in-kind). For multi-site operators, there is potential to share costs and roll out successful programmes across several locations.
No one-size-fits-all approach
There are many approaches to creating a unique destination and no substitute for taking the time to understand the context, to carefully analyse market and financial feasibility, and to craft a business plan that will meet the specific objectives of each project.
The challenge, as always, is to demonstrate the added value of sustained investment through impact on visitor engagement, footfall and spending; perhaps aided by social media and data analytics tools that offer greater insight into visitor behavior and impacts on trading.
Download the report.
Contact Colliers’ destination consulting experts today to find out how you can optimise leisure, culture, and entertainment uses at your commercial real estate project.