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Young Leaders Lunch and Learn with Brendan Jarvis, Barclays
Kindly hosted by PLP Architecture, April’s Lunch & Learn session offered the UK Young Leaders a chance to get inspired by Brendan Jarvis, He
6 June 2016
On 9th May 60 guests were hosted by Grosvenor in their fifth-floor meeting space for an interactive session convened by ULI UK Young Leaders to explore the Realities of Renting in the UK. Despite the 8am start on a Monday morning the room was packed, with attendees knowing they had beaten 100+ others still on the waiting list to a ticket to participate in this discussion.
Katherine Rodgers from Grosvenor opened the session with a nod to all the hard work put in by Alex Notay and the ULI UK Residential Council steering group on the latest Build to Rent Guide (available for purchase here), which has been a great resource for work on Grosvenor’s Bermondsey project. Grosvenor aspires to create in Bermondsey a new part of this urban neighbourhood with a rich history, offering homes to people of mixed incomes, backgrounds, life stages and jobs.
Rather than talking about the private rented sector, Adam Challis of JLL Residential thinks we should start referring to Private Rented Communities (PRCs) – which are about the end customer; much more than just bricks and mortar. In terms of investor demand and increased allocations, PRCs and Student Housing lead alternative asset preferences from institutional investors. And why should we all care? Supply is needed, PRCs are counter-cyclical which protects jobs, drives early regeneration, make economic sense and ultimately will improve tenure quality.
Capital investment for BtR is coming from many different markets, noted Dominic Martin of Westrock. This has meant that BtR is no longer considered the ‘poor cousin’ to the commercial sector within the real estate industry. In North America and mainland Europe, it is known instead for generating safe, consistent returns. As it becomes a more prominent asset class, numerous trends start being observable which make the sector stand out from Buy to Let investments – from Smart Meters and IT/software systems, through car-pooling and community-building, to using one brand of appliances in a building. At the same time, more BtR JVs are formed as demand continues to outstrip supply.
Michelle Hannah of Cast Consultancy talked numbers and viability. Build to Rent has introduced the cradle to grave approach for financial viability versus for sale product which just looked to the point of completion. A development AND operational appraisal are required which is new territory for some developers and requires a change in the investment assessment mindset. It is key to understand the metrics with a long-term asset where the focus shifts from IRR to yield, and recognition of a different IRR target to that of a for sale product assuming a hold period past completion. Considerations should be given to optimising procurement and deliverability through the use of offsite manufacturing and bulk purchasing & agreements.
Gina McMorran shared how Essential Living is working to change the perception of renting from being the alternative to home ownership to being a tenure and lifestyle of choice. Essential is involved with the full product lifecycle from land acquisition to operations. Gina’s marketing campaign outlines the benefits of renting with Essential including optionality, community, hassle free renting, no hidden costs and responsive maintenance – all as part of the approach “putting the customer at heart” approach.
Reinventing Renting is precisely what Adam Russell and Fizzy Living are focused on. As an acquisitions manager, Adam spoke about the investment perspective for BtR – with the key drivers being current and future rents, wage inflation as well as cost effectiveness in construction and operations. It is the ability to influence these three and focus towards a target market that drives the Fizzy BtR model. The 25-35 “rentie somethings” want something different to the market and a sense of home. An on-site manager is important, as generations today want everything instantly. A key differentiator has been allowing the end users to influence their new home – from virtual property tours to customising how their property is furnished.
Having disrupted the hotel industry with Yotel, Gerard Greene is now looking to revolutionise the way we live in rented accommodation with his brand Society. Some innovative approaches at Yotel included using aircraft designers for small rooms and automated check-in processes to reduce administrative costs. Gerard clearly plans to leverage this experience to shake up the BtR sector. He spoke about Society’s plan to focus on customer service and experience as an operator, versus owning assets. A major area for innovation in BtR/PRS is through technology and data analytics, which will help to drive revenue and efficiencies – for instance through understanding if revenue can be generated from on-site amenities.
Group Discussions
Following the introductions and six expert presentations, the room was split into six groups to focus on different topics. Each expert rotated between the groups to discuss the topic and share insights with the young leaders. The notes below include take-aways from the final plenary session.
Neighbourhoods
Lifestyle & Amenities
Affordability
Co-living & Sharing
Digital Living
Planning & Policy
Thank you to our fabulous moderator, Grosvenor for hosting, expert speakers, event organisers, and the participants for an engaging morning.
Want to know more or learn how you can get involved?Were you on the 100+ wait-list or otherwise unable to attend this event? Stay tuned! We are planning another Young Leaders event in the autumn which will be available exclusively to YL members. Not a member yet? Check out the ULI UK website to learn more.
Words by Emilie Walker, Alex Zolyniak and Alex Notay
This event was kindly sponsored by
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