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Results of Survey Stress Importance of Marketing

January 04, 1987

Marketing, design and research play a greater role in development decisions than they did five years ago, according to a survey of the nation's top 100 commercial developers.

The survey, which elicited a response of 30%, showed that developers exercise more control over design criteria than they did at the beginning of the decade; allocate 50% more money to promotion than they did in 1981 and would build only if a major anchor tenant were available or in-depth research revealed an untapped market.

"The emphasis on marketing considerations today is also reflected in the fact that more than half the developers have a marketing consultant or broker involved in initial discussions with the architect about design concept," according to N. Richard Lewis, president of Lewis & Associates, the Los Angeles-based public relations and advertising agency that conducted the survey.

Ninety-six percent of the developers responding also believe that marketing factors, such as potential tenant profile and building image should be integrated into architectural criteria at the outset of design discussions, he added.

Moreover, 44% of the survey respondents--many of them chief executives and partners--said they would conduct sophisticated market research prior to development.

Concerning advertising/public relations budgets, 63% said they followed no particular formula to develop a budget. But more than two-thirds said they are spending 50% more on promotion today than in 1981.

According to the survey, median promotion budgets of varying sized buildings are: $40,000 for 100,000-200,000 square feet; $75,000 for 200,000-400,000 square feet; $100,000 for 500,000 square feet, and $150,000 for buildings with more than 500,000 square feet.

Lewis added that, based on experience gained by his firm in marketing of more than 7 million square feet of commercial and industrial space, budgets in Southern California are larger. They range from 75 cents to $1 per square foot for buildings up to 400,000 square feet, he said.

Advertising is largely seen by developers as useful for creating an image for the building, with only minor usefulness in attracting tenants, the survey showed.

"However, the fact that more office building advertising lineage is being carried today than two or three years ago indicates that a building's image is increasingly perceived as a vital element in marketing programs," Lewis said.

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