Knowing your potential tenants
People always ask me why I haven’t expanded our business into the Valley. After all, there are tons of buildings out there and clear opportunities to make money.
The reason I haven’t is that I don’t understand the tenants in the Valley, so I’m not comfortable that our organization would know how to deliver a desirable product for them. Now, don’t get me wrong: I like large sections of the Valley (Ventura Blvd is basically like Sunset without the heroin addicts). I 100% understand why families looking for more space and less hassle move out there.
But our target demo, the people who we design our buildings for, usually don’t have children yet.* They’re willing to pay a premium to live in / near walkable areas filled with hip bars, nightclubs, coffee shops, vintage clothing stores, etc. They don’t need Viking or Bosch appliances, but they do seriously appreciate clean lines, open spaces, eco-friendly finishes, in-door/out-door living, etc.
No one has accused me of being hip lately – it’s pretty hard to stay current on the latest music, etc. when you spend your non-work time chasing a 19 month old around the house. But I can relate to our tenants, because they’re a lot like I was when I was until pretty recently.
A better real estate developer might immerse himself in the preferences of other demographic groups in order to open up additional opportunities. But, for better or worse, I haven’t done that yet. I’m maniacally focused on creating product for which a one certain, specific kind of person is willing to pay a premium.
*Note: We are 100% happy to rent to any qualified tenant willing to sign a lease, pay the rent, and be a good neighbor.