The real estate industry has talked about the “experience economy” for years. Placemaking, customer experience, activation and destination creation have all become familiar language and, in fairness, sometimes so familiar that they are easy to dismiss as another collection of property buzzwords.
I wrote a few years ago about how different real estate markets evolve at different speeds and where the next areas of opportunity might come from. What is interesting now is how similar some of the changes are becoming across markets.
And I think something more fundamental is happening.
Many major real estate assets are no longer behaving simply like buildings. They are becoming operating businesses, with their success increasingly determined not just by the quality of the physical asset, but by what happens there day in day out. Think about a major mixed-use scheme, shopping destination or urban development. It might simultaneously be a workplace, retail environment, hospitality venue, public space, events destination and community.
The customer, resident, employee, occupier or visitor does not particularly care how the ownership structure works or who manages which part of the asset. They simply experience the place. And increasingly, that experience influences commercial performance.
Building it is only the start
Historically, much of the real estate model was relatively straightforward: acquire an asset, develop it, lease it, manage it well and, eventually, refinance or sell it. That model has not disappeared. But in many sectors, owning the building is now only part of the equation.
Retail is perhaps the obvious example. Creating a successful destination today involves far more than collecting rent and maintaining common areas. There are programming, events, food and beverage, customer service, digital engagement, marketing and community engagement, alongside the constant question of why somebody should choose to spend their time there rather than somewhere else.
The same shift is happening elsewhere. Rental housing and student accommodation are selling service and community as much as space. Senior living increasingly blends property, hospitality, care and lifestyle. Major mixed-use developments are being run much more like destinations in their own right; think Kings Cross Estate and Olympia in the London, TRX in Kuala Lumper, Hudson Yards in New York, Jio World Centre, BKC in Mumbai.
Which raises an interesting question – As real estate becomes more operational and service-led, does it require a different kind of leader?
Who actually runs a destination?
Traditionally, the target market for somebody running a major asset was relatively predictable. Property management, asset management, surveying and facilities management were obvious places to look.
Today, the person running a major destination might need the commercial judgement of an Asset Manager, the customer focus of a hotelier, the operational discipline of an airport operator, the instincts of a retailer and the stakeholder skills of somebody running a major public institution. Quite a combination.
And I am not convinced the best candidate will always be found within traditional property.
Perhaps somebody running a major hotel has something to teach a mixed-use destination about service. Could somebody operating a sports venue understand customer experience and large-scale operations better than someone who has spent twenty years managing conventional buildings? What could senior living learn from hospitality, or workplaces from members’ clubs?
None of this makes property experience irrelevant. You still need to understand property, occupiers, risk and how these assets make money. But the interesting part is the combination.
From protecting value to creating it
Historically, operational property management could sometimes be regarded primarily as a cost: run the building efficiently, control expenditure, manage suppliers and keep occupiers happy. The best operational teams today are doing much more than that. They can influence visitation, customer loyalty, occupier performance and how attractive a destination is to future occupiers. In the right asset, all of that can ultimately feed into income and value.
If that is right, the person running the destination is not simply protecting value. They are helping create it. And if the role has changed, perhaps the way we search for those leaders needs to change too.
If every organisation recruiting a “Destination Director” only looks at other Destination Directors, eventually we simply move the same relatively small group of people around the industry.
Perhaps the better question is not “who has done this job before?” but “what does this person actually need to be fantastic at?”
Once you answer that properly, the search can look very different. And that does not mean pulling people in from hospitality, retail or leisure just for the sake of it. It means understanding what experience really matters, what can transfer from another sector and what can be learned. What are the competencies of the role and where else can we find those that fit.
We spend enormous amounts of time thinking about what to build, where to invest and how to position an asset. Perhaps we should spend a little more time thinking about who is actually going to run it.
Because if the building is becoming a business, surely we need to think differently about the person leading it.
Contact Matthew Evans to continue the discussion.