It is quite clear to us at Geraghty Taylor that Build to Rent has an incredibly valuable part to play in pump-priming successful mixed-use and tenure developments and de-risking a part of the disposal phase.
Alongside other rented residential solutions like student living, co-living and even retirement living, it has the power to deliver the activity, atmosphere and sense of community from the earliest phases of development, creating the vibrancy necessary to attract home buyers to the "for sale" elements of the scheme. Importantly, it can prove to be a very useful way to reduce development spending and recoup some cost at the earliest opportunity. The English Cities Fund have used the approach at Salford Central where the 225 unit Slate Yard BTR scheme sits alongside the wider £650mn mixed-use development.
Placemaking is so important in large-scale development. It is clearly about quality master-planning and sensitive design, but to truly create a sense of community it is so important to remember it is all about people; people who want to be there because of the quality of the environment and vibrancy of the atmosphere.
BTR brings activity. Using modern methods of construction, buildings can be delivered quickly. The let-up process is dramatically faster than traditional sales, so residents start using the site much earlier and high occupancy levels are achieved quickly. This is in marked contrast to the situation in some of London's notorious see-through towers where buyers are non-resident investors who frequently leave their investments vacant and often don't let them on as BTLs.
BTR schemes are typically close to transport hubs and so espouse reduced car ownership, preferring instead car-pooling and sharing. Bike usage is also high and this all leads to increased journeys on foot or bicycle creating a more human presence in the scheme.
Suitable amenity provision is standard in BTR buildings. This amenity can often be shared with residents of other buildings in the complex or even opened to a wider local membership.
The UK now enjoys two hugely successful schemes which have fully embraced BTR. Get Living's scheme at East Village was the pioneer, quickly followed by Tipi's Wembley Park scheme which was initially conceived as "for sale" residential. We can learn a lot by looking at the experience of these developments over the last 10 years or so.
East Village's origins as the Olympic village meant that it had no specific amenity provided. The new phases of development will incorporate shared facilities to be used across the village. Importantly, the development has supported the creation of a new school and interestingly helps fund a system of security cameras and additional policing.
With the arrival of the Brent Civic Centre, Wembley Park has integrated civic functions offering a library and hireable function rooms. They have developed an environment to encourage successful food and beverage provision with the creation of the designer outlet centre and Boxpark which nicely dovetails in with the extensive student living on site. All of this is supported by local convenience retailing.
These pioneers have discovered that their product appeals to a much wider base than purely millennials. "Millennial-minded" people come in all ages and from all backgrounds.
Just this week, L&G has announced their proposals for 1,000 new homes in Wandsworth catering for "all ages and social groups" including 35% affordable housing. At the start of May, they also announced plans to launch Guild Living; a £2 billion business combining retirement living with children's nurseries in city centres.
So if our decision to include BTR has created the vibrancy we desired, what has it done for our financial position? Well, we are receiving income faster and this income producing asset delivers opportunity. A management contract may have already been agreed with an appropriate operator and the asset is highly saleable. Indeed, institutional investors are hungry for this type of product and will commit at the outset.
This provides a rare opportunity to reduce total development expenditure at an early stage in the overall project plan, recycling capital and helping with cash flow and profitability. Given our deep involvement in the BTR space, Geraghty Taylor has developed an audit capacity which lets us review existing buildings and advise on their suitability for letting and give guidance on any potential interventions required to make them suitable for the purpose.
BTR is fast establishing itself as an important use-class in its own right, earning itself an undeniable place in mixed-use developments.
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