Real Estate/Advertising Partnership Revitalizes Oceanfront Community
Creating partnerships with other service providers is a common business practice for commercial real estate professionals. But partnering commercial brokerage with a full-service marketing firm "might be a first," says Jim Donahoe, CCIM, a principal in Chandler, Brooks, & Donahoe, based in Olympia, Wash.
"Professional marketing, advertising, and public relations expertise mixed into a real estate brokerage is a powerful, winning combination," Donahoe says, explaining how he, a broker with 20 years experience in hotel/resort development, joined an advertising agency that specializes in marketing resort communities. It was a marriage made not in heaven but in Ocean Shores, Wash., a coastal community about 130 miles southwest of Seattle.
A Natural Beauty
Ocean Shores looks like a developer's dream: The 6,000-acre peninsula offers six miles of sandy beaches and 23 miles of freshwater lakes and canals that offer some of the best year-round fishing in western Washington.
In fact, the town began as a developer's dream. "Originally developed as a 12,000-lot resort subdivision in 1960, the Ocean Shores developers ran out of money in 1970 and were unable to continue," Donahoe says. "The large developer-owned parcels were sold off to speculators, [who were] waiting for the next big master developer to step in. Well, that never happened."
Although it incorporated in 1970, the town saw little development over the next 20 years due to many factors. In the early '70s, local employer Boeing Co. was hit hard and its layoffs prompted the billboard stating, "Will the last person leaving Seattle please turn out the lights?" Not only did Ocean Shores suffer during those recessionary times, the city's development efforts lost momentum.
"As of 1990, Ocean Shores was less than 15 percent developed and its 30-year-old infrastructure was in desperate need of a citywide sewer system, street upgrades, and other improvements," Donahoe says. "With little growth and with more than 10,000 undeveloped lots, the city did not have the tax base necessary to maintain its infrastructure, just compounding the problem."
Finally, in 1988 the community formed a volunteer-run development association but had little luck attracting businesses on its own. In 1992, with funding from the city, the Ocean Shores Development Association hired Chandler & Brooks, a resort-development marketing firm, to help recruit new business to the community. Donahoe, a native son who recently had returned to Ocean Shores and was the broker at a local real estate company, teamed up with the firm to assist with the recruitment effort.
"The combination of Brooks' advertising expertise and my real estate background turned out to be a winning combination," Donahoe says. "In three years, this town of 3,000 residents saw more development than in the previous 15 years combined." In fact, the city saw more than $120 million in new construction spending, and for the last several years, new home starts have averaged one every three days.
The key to their success was marketing opportunities instead of real estate. The development association created a list of 10 types of businesses that it considered essential to improving the town's tax base. Since the town already had a conference center, the association targeted a flagship conference hotel, chain hotels, retail and office tenants, time shares, restaurants, and other tourist-oriented businesses.
"The first project was to land a flagship conference resort hotel at the primary beach approach, which sees 2.6 million visitors a year," Donahoe says. "Armed with professionally produced marketing materials aimed at the opportunity, instead of the property, we called and sent teasers and follow-up information to targeted hotel developers and franchise companies."
After the direct-mail teasers came one-to-one phone calls and appointments for personal presentations. "Once a developer was interested, we worked to find the right location and also assisted in convincing local financial institutions to fund the project," he says. "In a nutshell, Shilo Inns & Resorts, based in Portland, Ore., built a $15 million full-service conference hotel with more than 12,000 sf of meeting and banquet space, doubling the conference space in the city."
The Shilo Inn project took only 10 months to negotiate, which included the removal of all contingencies, financing, and an agreement with the city for public right-of-way improvements.
Along with Shilo Inn, Donahoe and Brooks were instrumental in bringing in the new Quinault Beach Resort, a $56 million oceanfront casino resort hotel and spa that opened in May; a $4 million beachfront Best Western hotel; a $2.5 million Holiday Inn Express; a $1.5 million Days Inn; $6 million in new beachfront time-share projects; a $4 million retirement housing project; a Dairy Queen, McDonald's, Texaco, and 100,000 sf of other retail; a $2 million miniature golf and entertainment center; an animal hospital; and additional medical and professional services.
Other than a $250,000 state grant for infrastructure and a state loan for public sidewalks and beautification, no other incentives were necessary during the recruiting process.
Donahoe says that the "four-year recruitment effort is still seeing results from the program, with total new development at more than $200 million over the past eight years." New projects on the drawing board include a $140 million themed destination resort to be developed around the Ocean Shores marina, and a mixed-use championship golf course community on 450 acres near the casino.
The city of Ocean Shores paid $85,000 a year for three years for the marketing effort and is seeing a 600 percent annual cash return on its investment, Donahoe says. The new tax base has allowed the city to recently complete $4 million in street reconstruction and a $60 million sewer system.
First-Class Marketing Materials
"The concept of selling business opportunities as opposed to real estate is a far more effective real estate marketing technique, although it requires a proactive approach," Donahoe says. "Rather than relying on multiple listing services and waiting for the phones to ring, we actually built a database of key contacts for each item to be recruited and then called each contact on the list, following up with first-class marketing materials.
"In many cases, landowners will hire our firm on a fee plus commission basis so that we can create the type of marketing materials and sales program that will be much more effective and will garner higher sales prices and quicker sales than in typical commission-only arrangements."
These programs range anywhere from a few thousand dollars to more than $15,000 depending on the complexity and scope of the marketing effort, the land, and sales materials needed. In every case, according to Donahoe, the client has seen a faster sale and higher margins than in the typical real estate deal.
For rural areas, first-class materials are essential to boost the area's image and to attract high-quality development, Donahoe says. The materials often provide the first impression and must be good enough to "close the sale" in terms of creating development interest.
"The mix of marketing and real estate actually makes the broker's job a lot easier," he adds. "Quality marketing materials make all the difference. I see dozens and dozens of properties coming across my desk almost daily, and the ones that grab my attention are the ones I read and look through. If a property owner is going to the time and expense to really showcase his or her property, selling a money-making opportunity, then that's the person I'd like to do business with. We make sure our marketing materials stand out from the rest, and that is a major advantage in a competitive environment."
Having an in-house ad agency has been a major relief for Donahoe, who officially joined Chandler & Brooks last year. He says now he can concentrate on closing deals as opposed to worrying about the actual outreach effort. One surprise in the melding of two industries in one office was the seamless integration of the two, he says. Brooks had some real estate development background while Donahoe had some advertising background that made the transition easy and fluid.
Additionally, "the creation of real estate marketing partnerships between landowners, the local community, and real estate firms provides a win-win situation and is the wave of the future," he says.