This year marks a decade since the arrival of the UK’s first BTR home. The role of amenities and how they are perceived by renters has changed a lot during that period, while the industry’s response has been mixed. There is still room to get smarter.
Getting smart with amenities is down to how we use space. It involves considering the appropriate levels of spec; how to repurpose; and, crucially, what we actually need, with quality of living and investment return the underlying context.
When I say what ’we’ need, I actually mean the customer. Many BTR developers have been guilty of a headstrong pursuit of visions drawn up in boardrooms, with an insufficient appreciation of what renters are after and how that ties into the amenity offer.
The irony is that income generation is hampered by this line of thinking. Swimming pools and yoga studios aren’t quite as impressive if renters are living in small, poorly designed apartments.
Shifts in demographics, working habits and preferences among renters mean developers must rethink their plans. Some of the changes are pandemic related, others reflect natural market growth across the past 10 years.
Costing models have also had time to crystallise over that period, and an increasingly competitive market has pushed developers to raise the bar.
People won’t rent an apartment if they can’t work from home - swimming pool or not
There is also a growing sense that convenience, a pivotal feature of the BTR offer, is best served by due consideration for things such as parcel storage, bicycle racks and loading bays. Renters are rightly coming to expect attention to practical detail and management teams need to be able to do their job effectively.
Flexibility has shot to the fore. The home-working revolution means that renters need high-quality shared spaces to work and host meetings. They won’t rent an apartment if they can’t work from home – heated swimming pool or not.
Flexible also means future-proof. It would be foolish to think that renters’ requirements will look the same 10 years from now, which puts the onus on developers to create multi-use spaces. Spaces that can be flexed and repurposed can be the balance sheet’s best friend.
It also speaks to the climate-conscious approach required of today’s investor, as do green spaces and charging bays for electric cars.
Many, if not all, in the industry have been guilty of over-speccing. But a growing minority are taking the view that the sorts of operational costs associated with the trendiest of amenities, compounded by topsy-turvy demand, will raise the eyebrows of the most generous of investors.
It’s not that developers have been getting it all wrong. It’s just that the world has moved on and the market has evolved. That has provided some clarity on what renters need and the economics behind that.
Turn the clock back 10 years and we didn’t have much to work with, and our hopes for how a new generation of renters would take to a professionalised approach were guided by a sense of optimism and speculation.
Renters represent the golden thread that weave this all together. Ground-up design and operational management must be the modus operandi if BTR is to realise its full potential.
Martin Bellinger is principal at Goodstone Living