Identifying Core Competencies and Building a Competitive Advantage in CRE
What do you do best as a commercial real estate operator and investor? In other words, what sets you apart and puts you ahead of the competition?
When you can answer these questions, you’ll have identified your core competencies. I say that in plural because we all have more than one strength, and a solid competitive advantage is often a combination of abilities.
Building a competitive advantage in CRE is contingent on knowing what our strengths are, focusing and developing them to give us the edge, and then relating that to our prospects and community through our value proposition and brand positioning.
Here, we’ll consider how to identify what differentiates you and put it to work to build your competitive advantage and brand.
1. Identify what you do best
We may feel we know, and probably have a good idea, what areas in business we’re good at. Our customers, partners, and other stakeholders will often sing our praises, and throughout our careers and enterprising-building efforts, we’ve discovered where we shine.
Yet, developing a robust value proposition/advantage and effectively articulating it requires digging deep to reveal all our core competencies. And just identifying them isn’t adequate — it takes quantitative and qualitative data to give us usable insights that will point us to where we need to focus and improve to create pitch materials that provide concrete evidence of our abilities.
Some of the common competencies in CRE include:
- Strong negotiation skills.
- Running assets and portfolios lean.
- Capably and consistently attracting tenants (marketing).
- Understanding tenant and investor needs/desires/preferences.
- Deal analysis; determining feasibility.
- Reliably raising substantial capital.
What’s notable among these strengths is they all result directly or indirectly in strong/growing NOI and stakeholder satisfaction. However, knowing that margins are strong isn’t a compelling enough insight to create a good argument for investors and other parties to get involved with your venture or assets.
They want to know more. To understand what underlying strengths drive that performance (i.e., quantify and objectively characterize them), we need a body of data. Fortunately, the data is there, and when we have it organized and centralized, we can reference and analyze it to spot where in our operations we’re excelling (and where we need to optimize).
For instance, if we have a robust data management system and policies, we can quickly run reports to determine our most significant cost efficiencies, such as what properties are doing the best and what factors drive the strong performance — lease rates at market, low PM costs and Capex, minimal tenant turnover, etc.
From these quantitative insights, we may see that some of our core competencies are running lean and keeping tenants interested and satisfied. And with data to back up our claims, we can make a justified pitch to investors.
2. Develop your competitive advantage
There are many competent operators and sponsors in any market, so gaining an edge and winning capital and tenants takes everything we can muster. Knowing our core competencies is important, but bolstering, refining, and synergizing them is even more crucial to create an unbeatable competitive advantage in your market.
Where you find strengths, work to bring out the best in your teams, acquire the resources and talent to take them further, and refine your processes. Also, look for opportunities in related areas of operations that, if optimized and strengthened, would create so much value that it would be difficult for stakeholders to dismiss as commonplace.
For example, consider these strengths that, if taken to their peak and paired with other competencies, will focus and differentiate our value props:
- Sourcing value-add opportunities +
- Identifying markets with stable demand factors.
- Providing design and amenities that tenants actively seek +
- Offering property/tenant management systems and a company culture that keeps tenants satisfied and feeling valued.
- Maintaining lean property management expenses +
- Designing/developing/redeveloping for efficiency and minimal environmental impact.
- Recruiting and retaining the best talent in each functional area +
- Developing a workplace open to and uniquely supportive of all team members.
- Leveraging available technological resources +
- Capturing, centralizing, and analyzing data to support high-quality strategic decision-making.
3. Position your brand to harness the advantage
Now, you know where you’re the leader, have formulated a winning competitive advantage, and have the data to back it up — is that enough?
If you’re relying solely on your network or local community to raise capital and find tenants, and only share your offerings with those groups, you might be good to go (for the short term).
But as you scale and take on more acquisitions, capital and tenant requirements will rise significantly. As you grow, what you can draw from the network you’ve built organically (and the local tenant base aware of your property and development activity) won’t be sufficient.
You’ll be pushed to reach further — with your brand as your emissary. Purposely expressing in your marketing what you do best, who you do it for, and why stakeholders should buy into your organization and properties is essential in garnering attention, building credibility, and obtaining commitments from people and organizations you don’t have preexisting relationships with.
Besides, those who are part of your network will appreciate and respect the thoughtful and well-supported expression of what differentiates you, earning their continued faith and loyalty.
Opening new markets
Knowing where we excel, doing what it takes to go further, backing up those strengths with data, and expressing those competencies, puts your commercial real estate enterprise in a position to attract the capital, tenants, and talent it takes to build an economically and strategically sustainable venture.
Effectively relating the value you can uniquely generate for your current and potential stakeholders is the zest that builds credibility in your industry and community, fosters long-term business relationships, and opens new markets.