Making wellbeing pay in the BTR sector- 3 roundtable takeaways
“We shape our buildings and afterwards our buildings shape us”. For those attending the latest UK Apartment Association Roundtable, few surely expected Churchilian quotes, or being asked to participate in a dynamic muscle stretch before the panel discussion. However both provided the platform for an excellent debate on the theme of wellbeing in Build to Rent, with a superb panel comprising Sophie Carruthers, Head of Sustainability for LaSalle Investment Management, Charlotte Hopkinson, Head of Sustainability for Grainger plc, and Kevin McGeough, Director of the Healthy New Town Programme at Ebbsfleet Garden City.
Here are three bite size takeaways:
1. A trend for more residential amenity, less commercial floorspace
The panel accepted that the benefit of wellbeing provision in BTR is yet to filter down into valuations, or at least, it is difficult to attribute any uplift in valuation to those features. However, in new BTR developments, Grainger can now model more amenity space in lieu of what once was typically set aside as commercial. Put simply, Grainger is now confident that the additional amenity provision can demand premium rents.
2. One size does not fit all
Sophie Carruthers accepted that for LaSalle, amenity provision was very much “trial and error”. She admitted that a rooftop allotment scheme in Canning Town had flopped, but LaSalle had reconfigured inexpensively to a much more successful general community space. In addition, it is clear that provision depends on the asset location. For those in London, tenants (or rather customers!) may appreciate dining rooms, guest suites (e.g. for visiting parents) and gyms. For those in regional cities, pet friendly policies and cinema rooms are in demand- a dining room may go unused. In short, targeted investment is key.
3. Futureproofing needs early thought
You can improve wellbeing amenity in an asset at any price point. However as you move up the price spectrum, it is extremely difficult to retrofit. To retain an asset that can remain competitive in the market, developers and investors therefore need to think carefully at an early stage in the design process as to how that asset can deliver wellbeing benefits to its occupants.
Edward is a senior associate in our Commercial Real Estate team.