The Nitty-Gritty of Competitive Positioning

As an industry, we are deep in the trenches of a downturn characterized by lower sales volume, higher inventory, mounting foreclosures, discerning and reluctant buyers, and tighter lending standards.   Having felt the sting of the initial turn in the market, we are now smack of in the middle of what I call ‘housing’s new reality.’ 

This less-than-ideal truth has prompted many to ask, “What can I do?” 

One course of action is to take a long look at what differentiates your product from others.  Preferably this is done during the initial planning process, a time in which you have the best chance, through careful planning and market research, to maximize land use and profitability.   Nevertheless, doing what you can to set your project apart during any stage of the development process is certainly better than no attempt at all.

Product Differentiators:

Price.  Current research has shown, and common sense can tell you, that the more affordable a project is priced the greater likelihood it will sell.   The rapid price appreciation present in many markets over the course of just a few years has caused the affordability ratio in these markets to decrease significantly.  Even with solid economic fundamentals like job growth, incomes have not kept up with home prices.  One way to confront this new reality that I’ve spoken of is to adjust price points on both the land and finished unit.  Affordability and attainable price points are critical as the market undergoes this transition. 

Product Configuration.   With a greater acceptance of smaller spaces amongst buyers, a well-designed project that reasonably increases density is a smart option to maximize profitability.   With higher density projects, exterior design is important.  By varying architectural styles within the project, builders can differentiate one product type from another.  Including unique or eye-catching exterior design elements that will appeal to buyers aesthetically is another way to distinguish product types.  And finally, while it may be more challenging with higher density housing, examine your options to provide or increase parking availability to units.   For instance, creative design that allows tandem parking spaces may be the tipping point for your next buyer.

Living Space.   While higher density projects may result in smaller unit square footage, they should not sacrifice functionality.  By designing floor plans that maximize living space and create more utility, you provide more value in less space.   An example might be to offer more built-in storage options, solving a common problem for smaller spaces, and making occupants happy.  Because buyers are savvy to standard features, another method to differentiate your product is to provide a higher level of specification than your competitors.   Lastly, I strongly recommend you review your plan for outdoor living space, both within the unit and beyond in the community.   Buyers will consider amenities like a terrace connected to the unit and planned parks and walking trails within the community as an extension of their living space, ultimately creating more value in the buyer’s mind and satisfying the desire for an outdoor connection. 

Common Area.  When creating a project’s site plan, pedestrian access both internally and externally is vital.   Good walkability within the community is important.  For example, providing large sidewalks or well-planned walking paths is smart.  Additionally, don’t neglect the need for well-planned access to and from important or attractive areas adjacent to the project, such as parks or retail outlets.   Finally, offering social gathering spots like a clubhouse, BBQ pits, or benches along paths, again, can also create value and extend the living space.   

Security.  Providing a sense of security is particularly important for urban, transitional, or redeveloping areas.   Simply having features like a gate or a guard house, even without the guard, will foster a greater sense of security and provide a barrier, though limited, to crime.

Landscaping.   When planning your budget, landscaping is an expense on which I suggest you do not skimp.  Consider your landscaping plan (and budget) as early as possible during the final building process.  Reflect on how potential buyers might respond when they arrive at a project with mature trees and manicured grass lawns compared to how they might react to one that is stark, still smacking of construction.   Well-executed, mature landscaping gives buyers an instant sense of community and entices them to imagine what it would be like to live in the project or neighborhood. 

During a time when inventory is increasing, and competition is fierce, taking the time to elevate your project above competitors and exceed buyers’ expectations will make the difference between a sales success and painful, stagnant units.   That said, competitive positioning is a complex, multi-step process that should be carefully defined through comprehensive research and analysis. 

Join us for More.

I invite you to join us as the Sullivan Group continues this discussion during the next round of Sullivan Seminars coming to five markets – San Francisco Bay Area, Sacramento, Las Vegas, Orange County, and San Diego - in October.   We will discuss both the national and local housing and economic landscape, and provide strategies to survive in housing’s new reality.  For more information visit www.sullivangroupadvisors.com.

Register Here