Ask residential or mixed-use real estate developers about their latest projects, and you’ll hear similar descriptions: unique, luxurious, great location, terrific amenities, excellent finishes.
But with sales sagging and more than 500 Denver-area properties priced at $500,000 and higher on the market as of July 1, companies are scrambling to find the right marketing strategy to attract homebuyers.
To lure the coveted market of well-to-do baby boomers, many developers are including elaborate sales facilities complete with design centers, walk-in model homes and scale models of the project.
“I’m not sure you can ask a baby boomer to spend $750,000 on a condo from a sales trailer. You have to create the whole Nordstrom-type customer experience,” said Jeff Englestad, a professor at the University of Denver’s Burns School of Real Estate and Construction Management.
“If you’re looking at affluent, older buyers, they want a spa-type experience from beginning to end. It’s what they’ve come to appreciate, and they’ll pay for it.”
Continuum Partners spent $2.2 million and 15 months to create a premium sales center for Kent Place in south Denver. The center includes three touch-screen monitors with a virtual reality-enhanced video of the project, an oversized 3/16 scale model of the entire development, a design center, conference room, on-site sales and construction staff, and a walk-in, 2,100-square-foot model of a two-bedroom condo complete with furnishings and appliances.
Built on the site of the old Denver Seminary, Kent Place has prices that begin in the low $600,000s and climb to more than $3 million.
“We created this sales center because of who our buyer is,” said Kevin Foltz, Continuum’s development director. “These are wealthy individuals who have been or are successful in business. They’ve gotten where they are by making smart decisions.”
More than 600 people have visited the sales center since it opened in April. Buyers generally return to the center five to eight times before they sign a contract and as many as 10 times afterward.
“The sales center gives us a leg up,” Foltz said. “I think you’ll lose buyers if you don’t have a quality sales program and sales center to show value.”
Is bigger better?
Brent Snyder, owner of Century Development, spent less than a quarter of Continuum’s budget to build a sales center for Welton Place in Five Points. Condos and town homes there begin in the mid-$200,000s and top out at about $700,000.
“We bought three old trailers built in the ’70s because all I wanted was the frame,” Snyder said.
Century revamped the trailers into a sales center that has space for two salespeople, a conference room, entry area and a model of a two-bedroom unit. Total cost: $400,000.
Spending less on a sales center isn’t necessarily a bad decision – particularly if companies understand their target market.
“It’s a question of how do I talk with customers in the most effective way. It’s not about creating the very best design center and thinking everybody’s going to like that, because they won’t,” said DU marketing professor Charles Patti. “No savvy businessperson is going to invest millions of dollars in a sales center if it’s irrelevant to the sales experience.”
Patti said the No. 1 rule for developers is “Get to know who the customers are and what the customers value – not just in features but in what they truly want to experience when they’re looking for a home.”
Two years ago, Opus spent $1.3 million to convert modular trailers into a 6,500-square-foot sales center for The Pinnacle in South City Park. The sales center includes a fashionable entry area, project scale model, and walk-in model unit with oversized photographs of actual views from tower-residence heights.
“There seems to be trend nationally that sales centers get larger and more extravagant each year,” said Scott Menefee, Opus real estate development director.
“It’s a competitive business. We’re building them because the target market we’re going after wants to understand what a 1,500-2,000- square-foot home feels like. Many are in 8,000-square-foot homes today. They want to see if they can live comfortably in a home smaller than the home they’re in.”
