Optimising Operational Efficiency in Build To Rent
20th April 2023 | As a founding member of the UK Apartment Association (UKAA), RealFoundations maintains an active presence at UKAA-hosted events and contributes leading perspectives to their Best Practice Guide, such as the Guide to Maturity Assessment, Selection Principles and Implementing Technology. RealFoundations’ UKAA membership grants the opportunity to engage with developers, owner/operators, managers, suppliers and professional services organisations in the multifamily space to gain a deeper view into how they navigate current trends and address key challenges in the sector.
At the UKAA Build to Rent (BTR) Expo held at the Business Design Centre in Islington, London on 20th April 2023, RealFoundations’ practitioners Mike Large and Simon Parsons joined other delegates and exhibitors to explore a variety of topics, with ESG at the heart of the thought leadership expert sessions. If you missed the event, including the following summary, click here for an expert recap.
Key Takeaways
#1 UK BTR Market shows strong tenant demand.
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Tenant demand in BTR has quadrupled since February 2019 (+323%). In comparison, the Private Rented Sector (PRS) was up only 44% over the same period.
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Demand for one-bedroom BTR homes outweighs supply, but supply and demand are more balanced in studio and two-bedroom BTR apartments.
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Higher rent BTR schemes have been associated with higher levels of satisfaction and resident ratings.
#2 Tenant trends indicate the importance of amenities, features and technology.
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With new home prices largely unaffordable for first-time buyers, BTR accommodation has become extremely attractive, especially to the young professional demographic. As demand fuels an increase in rent prices, tenant expectations have risen to an all-time high as well.
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Competition to meet tenant expectations has led to an emphasis on facilities, amenities, building design, and the implementation of technology to drive engagement and support the overall tenant experience which has shifted from a “nice-to-have” to a standard expectation.
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Notable amenities, services, and features among the ten highest-rated BTR communities include gyms, concierges, pet-friendly environments, resident events, 24-hour on-site management, communal lounges, bike storage, free Wi-Fi and an on-site maintenance team.
#3 Changing regulatory and ESG requirements are impacting BTR schemes.
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ESG is a significant consideration in the design of BTR schemes (particularly the environmental and social components) and responsibilities for meeting ESG targets must be shared across investors, developers and suppliers.
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Suppliers need to increase research and development to demonstrate their ability to produce products with lower carbon emissions. Developers and investors must shift focus onto the products and materials used when looking at whole-life costs, as future-proofing the original design will save costs versus retrofitting in the future.
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Data is key. The appropriate technology must be put in place to capture, store, monitor, maintain and analyse ESG data to enable the development’s stakeholders to measure performance against ESG benchmarks and/or evaluate improvement against a baseline.
#4 Effective use of vacant space can unlock both commercial and social value.
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The term “Meanwhile Space” was coined by the panel debating this topic. It was defined as “vacant or redundant space being used on a temporary basis with commercial and social value”.
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The panel viewed the space as an underutilised tool in the sales and marketing toolkit, and that the spaces should be used as ways in which to form bonds within the local community and the residents of the development itself, with this leading to increased retention for the BTR scheme.
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As the social aspect of BTR schemes increases in importance, the placemaking strategy is crucial for determining the best use of “meanwhile” space.
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There is a concept that a BTR scheme is like creating a members’ club that people will see, hear about on social media and want to join. This will result in higher tenant retention, greater demand for BTR accommodation and therefore likely drive an increase in rents.
Closing Remarks
The effective definition and deployment of a well-considered technology strategy is an essential element in optimising operational efficiency, reducing costs and maximising revenue in BTR schemes. With a whole plethora of targeted and specific solutions now available on the ever-burgeoning PropTech market, it is very easy to be seduced by individual applications, without giving due thought to how they will communicate with each other; how they fit into the overall business operating model; what specific value they will add; how their data can effectively be exploited and how they will be maintained throughout their life cycle.
However, at RealFoundations, we believe that a more holistic view must be taken. The overall business operating platform and application architecture require consideration before potentially procuring and implementing specific technological solutions. Many leaders in the BTR space rely on our expertise to help design industry-leading, performance-driven operating models that deliver optimal results for their organisations.
So, have emerging trends, regulatory requirements and an abundance of proptech solutions left you wondering just where to start? Real estate developers, owner/operators, managers, suppliers and service providers rely on RealFoundations to weed through what is critical, what is attainable and what is simply noise. And while overall objectives may seem uniquely your own, our practitioners draw upon an array of project and platform experience to help alleviate such concerns and overcome the most pressing of challenges, including those previously deemed insurmountable. Together, we can plan a path forward that embraces best practices reinforced with solutions customised to meet the demands of your organisation today, tomorrow and beyond. Since time is of the essence, why wait for the next event?
About RealFoundations
RealFoundations (RF) is the world’s foremost professional services firm focused solely on the real estate industry. Through our delivery of Management Consulting and Managed Services, we help companies that develop, own, operate, service or invest in real estate make better, more profitable decisions. We are proud partners to over 500 real estate companies around the globe, providing accelerated solutions that solve some of real estate’s most complex challenges. We Make Real Estate Run Better.
