In any industry, a product or service is only in demand if it is what the consumer wants. The process – from design to delivery and customer service – should be led by the needs of the end user. Accordingly, build to rent will be a successful asset class if the right properties are built for the right demographic and communities and managed by the right people.
The product
Build to rent design must start with the demographic, taking into consideration factors such as the location, employment figures and projections, average earnings and local amenities. Alongside market and socio-economic trends, these factors create a matrix to help find the perfect point of equilibrium for a successful scheme. And for investment longevity, ideally the product will have the ability to evolve with market trends.
Brands have different value propositions – at the two ends of the retail spectrum, designers like Burberry have a high value, low volume strategy, whereas Primark takes a more pile ‘em high and sell ‘em cheap approach. Customers choose where to shop and buy, knowing the quality of product and the level of service to expect.
Both the development design and service proposition are led by the resident profile and personal values of the end user.
Build to rent is similar in regard to product and service expectation, and as with any consumer industry, there is no one-size-fits-all. Both the development design and service proposition are led by the resident profile and personal values of the end user. Every detail, from the fixtures and fittings to the communal areas and amenities, has to be carefully considered; will these types of renters want open plan living? Will they use a business centre, club lounge or want 24/7 resident services (or even, believe it or not, a dog wash!), and importantly, will they pay more for these perks?
At Allsop, we are primarily seeing investors target the core rental market, the largest part of the bell curve as, due to limited supply and high demand, it is seen as a more robust investment. For example, last year Grainger launched Abbeville Apartments, a build to rent scheme near Barking Station that is very much fit for purpose. The 100-unit development has a gym, a reception area that doubles up as an event space, cycle store, loading bay, free WiFi and friendly, relaxed and professional service. Looking at the micro market, it ticks all the boxes and, as a result, let quickly and is now seeing apartments re-let with a considerable uplift in rent.
The people
Build to rent must also be underpinned by a hospitality-led service. Those working within the sector need to have a real understanding of, and inclination for, customer service. Having worked in the hotel industry, I know from experience how important it is to pair an appropriate level of service with different brands and price points.
A lot has been done to raise the profile of build to rent as an emerging asset class, but we still need to shrug off the old-school reputation that has come with traditional letting and management and create a new identity for the management of purpose-built rental property.
Take the coffee shop boom – with café culture now in full force, being a barista is a career in its own right and the ability to craft an artisan brew is certainly not something to be sniffed at. If the sector is to reach its potential, we have to take cues from the rebrand of the barista and reconsider the value that specialist management plays in making schemes a desirable place to live with added value. Those who enjoy coffee seek out a good barista and pay considerably more for both a crafted product and honed skill.
Good management is key
Whilst many of the skills required are similar to those in the mainstream letting and management profession, the management role in a build to rent scheme builds on these foundations to offer a specialist service. It combines the skills of a building, facilities and community manager, lettings manager, event planner, concierge, a friendly face and, when needed, maybe even an agony aunt. A build to rent manager should live and breathe the development and is the go-to person for everything from community liaison, letting and leasing, to arranging odd jobs and providing neighbourly advice.
This year, the Institute of Residential Property Management (IRPM) is launching a new management course with training and accreditation designed specifically for the build to rent sector. The course will cover silos of traditional lettings and facilities management, as well as sector specific modules on customer engagement and placemaking, which are unique and vital skill sets for the build to rent industry. The United Kingdom Apartment Association (UKAA) is also playing a role in build to rent education and training, so we are definitely moving in the right direction.
The central message is that management must not be an afterthought; investment in good management and hospitality is vital, otherwise the added long-term value will be lost. In addition to building a tailored product for a target market, the provision of a bespoke and fit for purpose management service helps set the proposition apart. Management success relies on its people – those who have the proven skill set, are proud of what they do, love their profession and are keen to reshape and enhance the value of an asset through their chosen craft.
