Over the past quarter century, developers, landlords and occupiers have increasingly looked to experiences to elevate a property’s appeal. This is difficult to quantify and measure but is crucial to unlocking the full potential and benefits of the built environment, according to a Cushman & Wakefield report.
The rise of experiences has been acknowledged as the next emphasis for the consumer economy by delivering memories rather than products and services. Within the commercial real estate market, these projects are seen most often in retail, hotel and lodging as well as museums, theatres, arenas and stadiums, the report said.
However, it can happen in all real estate sectors and is worthwhile for industry stakeholders to consider. U.S. consumers dedicate about one-quarter of their budget to services that are tied to experiences, including salons, fitness centers, restaurants, concerts, sporting events and other recreational activities, according to the report.
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Cushman & Wakefield explored the possibilities of the experiential economy in the real estate market in terms of its three primary categories: live, work and play.
According to the report, more than half of consumers prefer to live in a home within walking distance to shops and other amenities rather than a home where they must depend on a car. In addition, more than half of renters consider a strong sense of community to be very important to their well-being, and 40% view it as fairly important. Residential real estate planners can achieve this through access to shared amenities, gathering spaces and social events, such as community cooking classes and group fitness training.
Multifamily properties in walkable urban places that have a higher share of play real estate nearby have shown better resilience and outcomes compared with those without nearby play options. Play real estate includes museums, theaters and local retail as well as essential services and goods such as grocery stores, hardware stores, self-care and fitness options.
In real estate associated with work, net operating income per square foot increases 2.4% in walkable urban places with an optimal amount of play spaces nearby. Employees don’t want to come to the office just to work. Instead, they want convenient amenities that also foster experience and entertainment with co-workers. Curating a hospitality-like environment is an emerging trend in the office sector, where access to multiple food, beverage, shopping and tourism options are a few examples of desired amenities.
Real estate associated with play is most obviously connected to the experience economy because these assets are the physical touchpoints where consumers interact with a brand, said the report.
“Brands have been integrating into their services and formats new ways of engaging customers to enhance value perceptions and create lasting relationships through immersion, storytelling, memory generation, and even exclusive product or service access,” said Cushman & Wakefield.
Developers and planners should consider demographics and target audiences to determine the most effective types of play. For example, 67% of Millennials are willing to pay more for unique experiences like traveling exhibits, while 53% of affluent consumers prefer ongoing engagements, such as seasonal memberships to local attractions, said the report.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
