The build-to-rent sector is playing an increasingly important role in delivering market-driven, purpose-designed homes. By responding to the demands of a new consumer, it is disrupting the status quo.
That is not to say the status quo couldn’t use a bit of disruption, and all of this is already well documented. It is hard to pick up an industry publication that has not trumpeted the imminent housing revolution. But what’ is actually going on here? Is a new type of product really emerging, one that understands the relationship of consumer focus and lifestyle? And what is the industry doing to anticipate demand? When the revolution comes, who will still be standing?
My American colleagues have a saying: “Settlers settle, pioneers get shot.” But that shouldn’t stop us.
And so they come: new brands, developers and operators with ambitious new ideas. Some will fail, usually those with overly aggressive financial models and outdated product. Some will succeed – those plugged into the zeitgeist of an increasingly sophisticated renter.
Perhaps more than any other building typology, a residential product is a reflection of consumer aspirations. Nowhere is this more evident than build-to-rent. Understanding the demographic profile of the target market is vital to creating buildings that people actually want to live in.
More and more we rely on big data to give us clues about the consumer: age, earnings, rent. These metrics are the engine of any viable financial model, but what gets lost is that renters are real people, not widgets.
We can make quantitative assumptions to a microscopic scale, but what of qualitative ones? What makes people, well, people?
Today’s renters must be nurtured and considered in tremendous detail, which is why we set out to understand how they want to live as much as where they want to live. Yes, we consider demographics, but we also mine consumer psychographics for those hidden gems that make our schemes stand out: what kind of music does our renter listen to? Are they tech savvy? What do they do at the weekend?
Properly calibrated – a balance between “demos” and “psychos”, the quantitative and the qualitative – consumer profiles give shape to key behavioural and aspirational qualities of the target market. And this is indispensable to the design, and leasing, process, especially when it comes to the escalating arms race of building amenities.
In what might be the key trade-off, the rising cost of property and the scarcity of developable sites mean that flats are getting smaller while the social benefits of living in a multi-tenant building are growing.
Public areas such as courtyards, lounges, rooftop terraces and even shared workspaces contribute to community building. Smart home technology, on-demand dining rooms, cinemas and other social spaces all make up for what won’t fit into a 500 sq ft flat.
In a sense, residents are renting the whole building, not just a bed and a loo; so the service, lifestyle and experience that are fostered within that building are key.
Striking a balance between all this is no small feat and, as a series of new build-to-rent developments are about to open their doors, we are seeing a push for more creative and distinct offerings.
In Manchester alone, some 10,000 build-to-rent flats will hit the market within months of each other, all targeting similar tenant profiles.
Developers need to get creative to stand out. We are starting to see the integration of workspace, bars, vegetable patches, libraries, farmers markets, meeting rooms, “life admin helpers”, hotel-style rooms for guests, pet spas, wine storage, bike maintenance rooms… the list goes on.
These spaces create opportunities for people to meet, socialise and stay put longer. One of our North American clients has found that renters are 75% more likely to renew their leases if they have a friend in the building and 90% more likely to renew if they have two friends or more as neighbours. It seems self-evident that residential schemes should be designed as communities that foster meaningful social interaction among tenants.
Come the revolution, build-to-rent will be more than a clever configuration of open-plan flats with access to a club room and a barbecue on the roof. Today’s renters are not simply looking for a place to live; they seek a sense of community.
So, think 15 years down the line, when our cities have become denser, the build-to-rent market is established and the competition is no longer a Victorian terrace conversion.
Renting is a choice, not a need. Will your product perform?
John Badman is a director at CallisonRTKL
