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Sweetening the deal in trying times

Condo Marketers: Up Their Game

July 26, 2008

Tenille Bonoguore And Lori Mcleod

The coating of celebrity was as thin as a French manicure, but it sparkled just enough to catch the eye of Toronto's voracious condo clique. A downtown developer was offering the chance to win a $75,000 deposit on a condo. All entrants had to do was resemble a celebrity, and start racking up supporting votes on Facebook.

And so the wannabes came, hoping they hovered close enough to glamour to clinch a prize that is the latest attention-grabber of Toronto's condo market.

"The prospect of winning $75,000 toward a condo, that's a good enough reason to get out of bed," said John Girgis, 31, a.k.a. Ben Stiller, at the 9 a.m. launch party for "Fly," a condo development planned for Front and Spadina.

No, he isn't interested in living like a superstar, although that's obviously the association Fly's developers Empire Communities would like to inspire with their month-long "So You Look Like A Movie Star?" competition.

Before that morning, the east-end resident wasn't even that interested in living downtown. Now, Mr. Girgis could be swayed. "If somebody offered you a $75,000 deposit on a building that may not be your first choice ... you know what? It caught my attention."

In the jangling world of Toronto condo marketing, shouting above the competitive din is proving a challenge, so condo developers are using bigger, newer ploys to get noticed.

Want a Yorkdale shopping spree? How about avoiding condo fees for a year? Developers are dishing out the freebies, and crafting increasingly niched marketing ploys, in a bid to tempt the city's young professionals and empty nesters.

And in the fevered world of condo "lifestyle" marketing, it's women who are the key.

Glossy lifestyle marketing

Toronto has long been flush with condominiums, but industry research firm Urbanation shows it has never been as hectic as today's market.

In the second quarter of 2008, Urbanation was tracking 290 condo projects in the Toronto census metropolitan area, ranging from unbuilt projects with sales offices to occupied but not yet registered buildings.

At the same time last year, when sales were booming, there were 247 new projects, said executive vice-president Jane Renwick.

Sales aren't quite keeping up. After a scorching 2007, condo sales have cooled but remain above historical averages.

"Last year the market was so hot that developers didn't need to do much beyond trying to differentiate their buildings. Some didn't even have sales offices," Ms. Renwick said. "In a softer market I think we will see them offering much better incentives."

Glossy condo magazines quickly reveal the prime focus: sell a lifestyle rather than a building, and sell that idea to women. The current issue of Condo Life has 49 full-page condo advertisements, only five of which prominently feature men. Women dominate, even if pictured as part of a couple, and 11 ads have no image of a building at all.

Industry research shows women almost always make the final decision on whether to make a home purchase, says Roman Bodnarchuk, the Toronto-based chairman of N5R.com Inc., one of North America's largest digital condo-marketing companies.

"We call it the rule of 92," said Mr. Bodnarchuk. "Women control 92 per cent of the condominium purchases. That's not to say that they're buying them all, but they're influencing those decisions."

With a market full of similar offerings, it's increasingly difficult to stand out. By peddling a lifestyle instead of a residential tower, developers can attract their target market and deter the rest.

"Nobody gets excited about those buildings except the architect, the developer, and maybe the contractor," Mr. Bodnarchuk said.

"Some [buildings] are nice, but most of them are quite ugly. No one really gets inspired by that, so that's why the imagery of lifestyle is so important."

Want to live the beach lifestyle? Head to California, South Beach or Malibu condos, all set to tower above the shores of chilly Lake Ontario.

Prefer something more continental? You could choose European (try London, Milan, Burano or Tuscany Gates) or New York (there's Gramercy, Madison Avenue Lofts and Manhattan Townhomes). Or perhaps you'd like to showcase your fashionista credentials (Boutique, Fashion House or Couture condos could be a perfect fit) or urban sensibilities (Bohemian Embassy, Fly).

Marketing teams spend about a year meeting with a project's architects and interior designers before coming up with the all-important name and condo "brand," said Montana Steele Advertising president Rene DeSantis.

"We try to get into the whole culture of who we're attracting," he said. "It's becoming more like clothing. 'This is what I want to wear, this is where I want to live.' "

In recent years, Toronto outstripped American and European cities in the sophistication of its condo marketing, says leading condo marketer Hunter Milborne. And that means the people here are in demand.

"Toronto probably has the most competitive condominium market in the world," Mr. Milborne said. "When developers do things in New York or Atlanta or Dubai, they come to Toronto's talent. ... They know it's the NFL of marketing here."

In a slowing economy, though, these glossy marketing efforts will likely swing more towards promotions such as Empire's movie-star look-alike contest, says Ken Wong, associate professor of marketing at the Queen's University School of Business.

"To the extent that people anticipate a major slowdown is coming, you would want to get these [condo] projects up and running as quickly as possible," Dr. Wong said. "Otherwise you may find yourself holding on to a piece of real estate for an extended period until the economy turns around, and the carrying costs kill you."

incentives, incentives

In addition to the glut of condos already being sold and/or built, many more are in the planning stages but haven't yet opened sales offices.

Urbanation was tracking 180,000 new proposed condominium units in the Toronto CMA (census measurement area) last financial quarter. That compares with 173,000 in the same period last year, and 158,000 in 2006, according to anecdotal data based on zoning and bylaw applications.

Both construction and mortgage financing have become more scarce, in part due to the global credit crunch, and available bank financing is being spread thinner among a greater number of competitors.

That means lenders may require a higher amount of units to be pre-sold before giving developers the green light, Ms. Renwick said.

The conditions have pressured Empire and other firms to make bold moves to engage potential buyers before developments open the sales books.

Incentives such as granite countertops and stainless-steel appliances, once used as a marketing tactic by builders when sales were slow, have become expected in downtown condos.

Instead, Gramercy Park in North York is offering free maintenance or a shopping spree, the first 20 buyers at Red Hot Condos were offered a free car, and Chicago is handing $10,000 back to early buyers.

Condo developers are also treading new ground in niche marketing, geographically targeted advertising and social networking in a bid to generate hype and ultimately sell their product.

Getting straight to a specific group of potential customers, and not worrying about anyone else, is a key to success, Dr. Wong said.

"The whole real-estate business has been very slow to do much more than post listings," he said.

"Something that works really well often resonates with the target group, and everyone else thinks it's a bit ridiculous" - much like Fly's movie-star look-alike competition. "To me, this has the hallmark of a great promotion."

But the Internet is more than just a platform for launching gimmicks and attention grabbers.

Condo marketing usually accounts for 2 per cent of a development's overall budget, with sales making up another 3 per cent.

Instead of spending that money on widespread campaigns through conventional media, developers and marketers expect the industry to move quickly to online methods that take the product directly to its target market.

"It's not about millions of people. I'd rather hit 300 people that are exactly who my target is than a million people that aren't," Mr. Bodnarchuk said.

For Empire, the contest is the result of months of planning following its purchase 18 months ago of the parking lot near Front Street and Spadina Avenue on which Fly, if all goes well, will one day sit.

The market has slowed since then, raising the stakes for the company's sales effort, says executive vice-president Paul Golini, Jr.

"There's no doubt that there's been a softening in the market. To say that hasn't happened would be fooling ourselves," Mr. Golini, Jr., said.

That was of little concern to the small group of would-be look-alikes - including a pouty Anna Nicole-Smith, a hat-toting Justin Timberlake, a bejewelled J.Lo and others - who strutted the short red carpet last week.

The twentysomethings deemed the Facebook competition a stroke of genius, and lapped up the chance to play the media celebrity game.

And the hype may have just won over one more potential buyer in Monique Crossfield, a personal banker from Pickering who impersonates Beyoncé and Brandy, and was paid to attend the launch.

"I've never thought of living in a condo, ever. I thought I'd always live in the suburbs," she said. "But this is exciting. I want to get involved. I wasn't looking for a condo, but why not?"

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