Wellness in the BTR Sector- roundtable résumé
On 4 July, representatives from arguably the majority of the UK’s Build to Rent sector assembled at the offices of Ashurst for a roundtable to discuss “Beyond the Hype: The Real Importance of Wellness in the BTR Sector”. Here are some thoughts on a wide ranging discussion (held under Chatham House Rules).
Wellness in the residential sector?
One panelist referred to the McKinsey conclusion that “Wellness” is “the next trillion dollar industry”, and reminded all that the industry demonstrated sustained growth throughout the post 2008 economic downturn. The concept has taken hold in the office sector but as the panelist noted, we spend 90% indoors and 65% of that is in the home. Awareness of how the home environment can influence health and wellbeing is on the increase. For example, air quality is now evident at the touch of a consumer button. It is no surprise that in a competitive consumer focused environment, the BTR sector is taking notice.
Hotels and AirBNB- in the BTR space?
For one panelist, both are disrupting the industry. In particular the hotel model is transitioning to the sector, and whilst not BTR, the panelist cited the example of Unite Students collaborating with Hypnos to differentiate its offering in terms of mattress quality (of course, a common hotel selling point). The panelist suggested hotelier like service focus will continue to influence development of the sector, with a strong focus on service metrics. At the same time, and certainly from the panelist’s point of view, many investors/ operators will search out features that residents are willing to pay a premium for, therefore generating greater value. As an example, discussion touched on the partnership between developer Moda/ Apache Capital Partners and digital wellness company Hero, an offer that clearly goes above and beyond the standard gym offering.
How elastic (upwards) are BTR rents?
It is a question that one panelist posed. The panelist cautioned that the industry cannot disregard financial wellbeing. He suggested that whilst everyone aspires to what he described as the “iPhone X” offering, living in the healthiest buildings with extensive services, affordability will present a ceiling to investors/ operators on the search for premium rents. Another panelist contrasted how other operators are not targeting the premium market, but rather lean on perhaps less costly offerings to create places/ communities where people want to live. The panelist used the example of a rooftop herb garden, tended by an onsite building manager, which had been well received by residents.
Wellness or sustainability?
What is the priority in BTR? The discussion concluded that it is certainly not an “either/or”, with considerable overlap between the two, although arguably wellbeing has moved up the resident agenda. Research suggests “stressed people stress buildings” (i.e. stressed people drive over consumption), and one panelist suggested that health and wellbeing and sustainability often go hand in hand (e.g. low energy lighting may offer benefits in both respects). In addition, another panelist referred to the block booking of BTR units by corporates to house employees, and how a BTR development that prioritises sustainability is likely to chime with the corporate ESG agenda (as well of course as that of investors).
For those interested in the wellness concept, keep an eye out for the BPF’s launch of its “Student Wellbeing in PBSA Guide” on 15 July, as well as the ULI’s own ULI UK: The Rise of Wellbeing Investment in Commercial Buildings Report (launched in Birmingham on 11 July).
With thanks to the presenting team/ panellists:
- Victoria Lockhart, Director of Market Development, Europe, IWBI
- Neil Burton, Global Practice Lead, Greystar
- David Williams, Development Director, Apache Capital
- Kirk Lindstrom, Chief Investment Officer, Round Hill Capital
- Jessica Vithlani, Building Manager, Way of Life
- James Aumonier, COO Long Harbour Group
- Claire Racine, Associate Director, Upstream Sustainability, JLL
- Charlotte Hopkinson, Head of Sustainability and CSR, Grainger
- Olga Turner, Co-Founder, Ekkist
- Ashley Perry, BTR Consultancy Director - LIV Consult
Edward is a senior associate in our Commercial Real Estate team.