CRE Tourism: Building With Dual Purposes in Mind
It’s no secret that architecture draws crowds—the Empire State Building alone generates nearly $85 million in revenue annually from visitors looking to admire the iconic building and its stunning aerial views. As the tourism industry swells thanks to Millennials prioritizing travel over accumulation of material goods, CRE professionals have a unique opportunity to drive additional profit through incorporating features that are desirable to travelers.
Build Features that Drive Tourism
The profitability in these build features lies in their multifaceted functionality. Creating spaces that may draw tourists also requires consideration of potential tenant uses, so think of these spaces as amenities that can also serve a functional purpose. This non-exhaustive list can get you started.
If your building has a skyline view, why not use this to your advantage? Tourists will pay steep entry fees for a vantage point that offers a unique and unimpeded look at a city. And, with the popularity of social media outlets such as Instagram, many visitors relish the opportunity to take pictures in front of recognizable buildings and landmarks. It’s hard to take a picture with a skyscraper from the ground. Think like a tourist in your market and see how features you may take for granted have value to travelers.
Considerations: Observation decks will likely be located near the top floor of your building. Make sure you have ample elevator space to ferry tourists to the top without sacrificing your building’s functionality to tenants. A single elevator that can only accommodate eight or so guests will not be sufficient if your building becomes a popular attraction for tourists. Congestion and frustration can be easily avoided by planning ahead.
Rooftop Bars, Lounges, and Restaurants
A cityscape view attracts more than just sightseers. All buildings have a roof, so why not utilize yours fully? Space that may otherwise be wasted can draw tourists in droves looking to indulge in experiential dining and relaxation. Many rooftop bars and restaurants are difficult to reserve and highly desirable, leading to high profitability. Consider this the VIP experience for more affluent travelers, rather than the revolving door tourism of such attractions as bus tours and observation towers. These visitors will likely spend hundreds on fine dining and look for a memorable, upscale experience.
Considerations: Consider the atmosphere you are looking to create, and how you will prepare the space for possible restaurant tenants. Open spaces for lounging will require the best views, and details like where the sun sets become important to forming a cohesive and attractive ambiance that offers luxury to visitors. Refrigeration, sanitation, and seating must all be planned for in advance, as well as balconies that minimize fall risk to reduce liability.
Historically Significant Properties
While many historic properties are under the ownership of local governments and not commercially available, there are buildings of historical value that may pique the interest of travelers looking for a quaint, niche setting to enjoy. Many older buildings are being redeveloped in adaptive reuse projects to suit new purposes. Depending on location, regional and personal history may be worth noting during such developments.
Considerations: When adapting historical buildings, preserve as much of the original architecture as is reasonable. Many travelers not consider the ambiance of a space part of its charm, so your property doesn’t have to be associated with an event or historical figure to be appealing. If you are adapting an office in a historic and accessible area, it’s likely that tourists will already be strolling through and taking photos of the streets and buildings simply due to their aesthetic. Draw them in with a ground-floor coffee shop, which will also engage tenants who appreciate the convenience of on-site beverage and breakfast options.
These are just a few ways to use destination travel to your advantage. Not all tourism-adapted properties are successful, though. Research your market extensively to see how tourists are already flowing through your city and whether your property has the right mix of location, features, and logistics to drive added revenue through tourism. A thorough cost-benefit analysis will ensure that you aren’t expending more money and time than it’s worth on such measures. While CRE is in a constant state of flux, keeping abreast of trends can help you identify new and unconventional opportunities in diverse and complex markets.
For further reading on the latest CRE trends, check out our free ebook: 20 Trends that will Shape CRE in 2019