The Prospecting Professor

Empty Nesters Get a New Nest...with Exposed Brick and Beams, and Spectacular Views

Empty Nesters Flock Together! Continuing yesterday's thoughts on one of the significant trends of 2004...Empty Nesters abandoning the suburban nest, and moving to the excitement/vibrancy of the urban core. In the first place, here are some more factoids on this trend...as well as the trend towards condos and loft-style living in general.

• Condos/Lofts/Townhomes are ideal for people who want the financial advantages of home ownership while maintaining the amenity-rich, low maintenance apartment lifestyle.
• Someone in this country turns 55 every 7 seconds.
• Nationally, 970,000 existing townhomes, condos and co-ops were sold in 2004...a record.
• In 2004, the median condo price rose 17% to $193,600...and exceeded the median price for a single family home for the first time since records have been kept.

How can financial advisors network/meet these urban-centric immigrants? Here are 13 networking ideas.

1. Volunteer for a local fundraising project.
2. Arrange to meet a prospect, or group of prospects, at a museum. Hire a docent for a private tour. Have lunch afterwords at the museum cafe.
3. Network with the development officers at the museum.
4. Start a visible community project, and solicit help from others.
5. Donate time and money to a cause and get to know the other donors.
6. Work for a political candidate (local office).
7. Volunteer for a local church, synagogue, mosque, etc.
8. Attend art gallery openings.
9. Volunteer to help at the polls for the next election.
10. Host a wine-tasting event at one of the local wine shops.
11. Take a cooking class at a local restaurant or gourmet shop.
12. Buy two tickets to a dance or theater performance...and give to a prospect to enjoy with his/her significant other.
13. Arrange for a small group to attend an arts performance (dance, theater, music, etc.). Go out for drinks afterwords to discuss. Better yet, invite one of the performers to accompany the group to join the discussion (Most performers are famished after a performance. Offer to buy an artist dinner and you could probably get the whole troupe).

The migration of empty nesters to urban cores is only part of a much bigger phenomenon. Savvy financial advisors should be attuned to these trends, and incorporate creative networking techniques into their client acquisition strategies.

Birds of a Feather and "Loft-y" Ambitions

"Birds of a feather will gather together." --Robert Burton

The loft trend is white-hot. Google "lofts" and you'll find more than 1.5 million entries. Not only is this trend hot in cities like San Francisco, New York, and Chicago...yet places like Tampa, Galveston, and Columbus are getting into the act too. All over the country, warehouses, mills, factories, and office buildings are being converted to residential use. In some markets, loft buildings are being constructed from  the ground up with features that mimic what you'll find in converted buildings.

The loft-developers seem to be going after two demographics. On one end, they are appealing to the younger, urban-centric, single professional...with properties priced somewhere in the $200s (varies by market). On the other hand, they also lust after the much, higher-end market...empty-nester couples who are well into their careers and seek the vibrancy of the city, many of whom can afford properties with a penthouse-like WOW factor. For loft developers, the conventional wisdom is that the middle of the market is "death".

SoHo in lower Manhattan is credited with being the first loft-enclave in the US. From the Civil War through the 1950's, the neighborhood was a busy light manufacturing center. By  the 1960's, the economic base gradually followed the flight to suburbia. What was left were multistory buildings with commercial and retail on the ground floor, with the upper stories vacant. These upper floors, with high ceilings and large windows were perfect for artists in need of studios and living space. Landlords were happy to lease them out at affordable levels.

Today, many developers have gone well beyond the minimum standards and upgraded buildings to state-of-the-art. Ideally, a developer buys a building at or close to land value, upgrades at a cost far less than new construction, and ends up with a building at rents near top of the market. Additionally, operating expenses can be low compared to comparable properties. Conventional apartments spend 45% of the effective gross income on operating expenses, while loft buildings have operating expenses at 25-35% of effective gross income.

Positioning. Back to the "birds of a feather" quote. For cities with significant numbers of loft-style properties, there are considerable networking opportunities for like-minded advisors. In the first place, if you walk through the office of most brokerage firms, you will find that many advisors have a sensibility and aesthetic that is rather suburban...with lots of pictures of golf courses and ducks. There seem to be a much smaller population of advisors, even those who work in downtown offices, who live in the city themselves and are positioned to network with the urban-centric, city-dweller.

Tomorrow, I will continue this discussion with a list of 10 relationship-building activities that advisors can undertake to target city dwellers. Additionally, I will discuss how advisors can also target the ancillary markets that have benefited from the urban renaissance, e.g. developers, mortgage bankers, etc. Stay tuned.