by Nick Wakeley
My people are destroyed from lack of knowledge. Because you have rejected knowledge I also reject you.
Hosea 4:6
Parts of the property industry are perishing, but is it from a lack of knowledge? In part the answer must be yes, the industry has been slow to grasp the need for market research. Also it has been hit by largely unforeseen economic factors and primarily by a sustained period of high interest rates.
Yet the picture which emerges from recent research is of an industry with little knowledge of its customer and, at least until very recently, showing little desire to understand the customer and his requirements. Thus the very high levels of dissatisfaction which are often encountered among occupiers with both products and suppliers should come as no surprise.
This dissatisfaction first becomes apparent through the practice of informal after-sales visits: in particular, frustrations with relatively small design details which had slipped through the design process are noticed.
And without a feedback loop from customer to supplier these errors and oversights were simply being repeated. A much better understanding of the way in which the occupier operates and uses his space lies at the heart of this issue.
Because “the customer is always right”, the cause of the problem must lie with the professionals in the industry — the suppliers. Research reveals an embarrasingly high level of dissatisfaction with suppliers. Architects, funds and developers are seen as not being prepared to listen and not wanting to give thought to the end-user. Marketing agents are seen to have a very poor knowledge of the product, and particularly of the building services.
So can this dissatisfaction be prevented? Yes, but only through the regular practice of post-occupancy evaluation (POE), the discipline of going back to buildings and asking:
- How can we improve the design next time?
- Can we try to understand your requirements better and how are they changing?
- How can we provide a better service to you in the future?
A recent POE on the first two phases of a business park has gleaned invaluable information so that the design can be improved in later phases, and it also provided some useful insights into how the developer could offer a better service to his clients.
Without thorough market research and POE studies, commercial property developers and agents are simply flying by intuition. In the bull market of recent years, market research has often been viewed as a luxury. In the short term this proved to be right if the acid test were simply the letting and funding of the development. Yet the fact remains that many of those who rejected the need for analytical research have perished or have come close to it.
Market fluctuations are an inevitability, but there is no doubt that the effects of the boom-slump cycle are exaggerated by the characteristic gut feel (ie unresearched) lemming-like invasion and then retreat from the market, once the writing on the wall has reached giant proportions.
In a free market economy it is almost incredible that suppliers of such an expensive product undertake so little market research, both before and after production.
Part of the problem is that the industry seems to have mistaken the identity of their customer, often treating the end-purchaser, the fund, as king, rather than the end-user, the tenant.
Furthermore, we have all been insulated from reality by the prolonged bull market, and by the fact that occupiers commonly sign 25-year supply contracts, namely leases. Until comparatively recently occupiers have not really had any choice that has enabled them to vote with their feet.
However, in recent months there has been a real hunger for information from within the industry, largely attributable to an investigation of why buildings are not letting.
People within the industry with an appetite for clear, reasoned, analytical research will come increasingly to the fore in the 1990s. And research will move from a useful supporting role to the hub of the decision-making process.
Finally, it would be most unfair to imply that this is a universally applicable criticism. An increasing number of architects, funds, developers and surveyors provide notable exceptions to the rule.
Until recently, the bulk of the property industry has pursued intestinal intuition rather than researched analysis. As a sector it stands alone in placing such a low priority on research and on the importance of the customer. Other areas of successful modern industry know that an ostrich-like determination to ignore these two issues is the quickest route to extinction.
Is it any wonder that the industry has taken such a beating?
