Rent competition, underused amenities, iffy conversion rates these are just a few of the issues builders and developers face in today’s high-stakes housing, hospitality and office markets. It’s tough to turn a profit in this era where every cent counts. As commercial interior designers who work in all three arenas, data is one of the most powerful tools at our disposal to ensure projects are profitable.
The most basic question for builders and developers has always been what to build where? For decades, demographics have been the cornerstone of that decision-making process. But they’re no longer enough especially given the uncertainty we face in today’s housing industry. That’s why psychographics have become one of the most important tools at our disposal, as my recent Builder and Developer Magazine column notes.
Psychographics measure consumers attitudes and interests rather than objective demographic criteria. They provide deep insight that complements what we learn from demographics, the HBR explains. As profound societal changes are disrupting conventions about how and where we want to live, they’re more important than ever.
Why do psychographics matter?
Think quantitative vs. qualitative. Just as many Millennials want micro-apartments as new homes, and Baby Boomers are all over the place when it comes to their housing choices. Diversity reigns supreme. Complicating matters further, there’s a great deal of crossover in generational housing decisions. Boomers have many of the same needs and wants as their Millennial children not the least of which is the desire to live near them.
And who knows what Gen Z (those born between 1997 and 2015) will want? The oldest are just leaving the nest, so to speak, but they are already the largest generation in the U.S. at 26 percent of the population.
It isn’t enough to say a project is targeting potential residents with a certain demographic profile, such as younger or older workers, active adults or retirees or even those earning a certain income.
While the demographic statistics of gender, income, marital status, education and ethnicity can help builders and developers determine the best location for a project before it even breaks ground, they don’t include the kind of insights that help predict what kind of spaces potential residents will want or which amenities will serve them best. But most significantly, they can’t help ensure that a project will have high conversion rates.
That’s where psychographics come in. When builders and developers add up all the variables surrounding housing today, their most basic concern is usually the same: what’s the most profitable type of housing to construct on a parcel of land? The best way to figure that out is by adding psychographics to the equation. They give us the ability to dig down into consumer values, opinions, attitudes, lifestyle and interests, as we noted in Globe Street.
Knowing the psychographic data about how different cohorts work, socialize or shop help us understand what the potential occupants of a project will needand want. This knowledge is critical to making decisions about everything from furniture to amenities. It can even be the difference between choosing a good location and a great one.
How psychographics are changing commercial interior design
Psychographics are just becoming mainstream in commercial interior design. But insights about specific cohorts preferences on health, wellness and sustainability have always informed our design work for communal spaces, amenities and model homes. We just didn’t call it that. We’ve been early adapters to this trend (which we think is here to stay) thanks to our commitment to Return on Environment (R.O.E.), a concept we developed to reflect the net benefits individuals gain from environments that enable them to do, feel and be their best.
The discovery process we use to increase Return on Environment relies on similar information that we amass through psychographic research. We’ve found that wants and needs vary geographically but intersect generationally. Understanding how popular certain preferences are in specific geographic areas has helped the project teams we work with formulate the philosophical underpinnings for entire developments and make critical decisions about how the will be designed and furnished.
Just as smartphones disrupted the way we communicate, psychographics will change the way we design not just housing but all buildings. But for now, with psychographic input housing is becoming more differentiated, focusing on everything from sustainability and wellness to active lifestyles and special interests such as gardening or gaming, and more diverse and inclusive as developments and communities are being designed to appeal to several generations at the same time. That’s not just good for builder and developers, it’s good for residents as well.