Build to rent to brand

Build to rent to brand

The build to rent sector in the UK is forecast to increase exponentially from today’s £9.6bn to over £540bn once it reaches maturity, according to Savills.

Having been born out of a reaction to the financial barriers to buying a first home, entrants in the sector are shifting their focus from purely ‘build to rent’ to the ongoing management of the service and experience offering. This focus is much closer to the ‘beds to rent’ mindset of the hotel sector to maximise yields.

Just as in the hotel sector, so too is the BTR sector starting to segment as players look for distinction versus the increasing competition. This is where the role of the brand is important and will play an increasing role in customer loyalty and premium achieved.

A brand is “a promise delivered”; it is critical to clarify why you exist and for whom at the outset. Only once this brand purpose is established can you create both the physical and arguably the more important experiential offer to match. It provides the ongoing focus to all aspects of the business, affecting decisions from initial land purchase and space allocation through to staff training and events management.

Such purpose can be very target market focused. A brand like Fizzy Living has a very tight customer profile and benefits from high occupancy rates because of this. It deliberately eschews many ‘upmarket’ resident facilities to maintain competitive pricing which appeals to its young professional audience.

Other brands may choose a value as its focus. Moda Living emphasises wellness. This affects fundamental design – for example, the internal walls have a higher sound insulation specification than normal. So you get a good night’s sleep before you work out in the gym or go to the residents’ morning yoga class. These and other features, events, personal health information and services, are provided by the company’s healthtech partner Hero.

Equally, the co-living offer from The Collective has a focus on creating community. Interestingly this focus on a value provides focus for the experience offer but has broad appeal in terms of customer. Its Old Oak site has a customer profile from 18-66, while its Canary Wharf location is proving very popular amongst corporates looking for an alternative to a hotel for employees when visiting or working in London. Its aspiration is to develop the brand globally.

The latter two examples point to one trend that is set to increase as the sector develops – what could be called the ‘blended approach’. This is where a mix of tenures, spaces, services and uses can come together within the same offering. Public and private facilities, hotel, workspace, leisure club and more.

The Boho brand operates across a range of offerings – student accommodation, rental apartments, hotels and co-living. Its first hotel in Dundee is being described as a co-living hotel, with guests either professionals or students, able to stay from one day to one year.

Pointing the way to a potentially major market disruption is 75 Rockefeller Plaza in New York. The redevelopment of this 1947 building will see it offer all-suite hotel rooms, serviced apartments, co-working space, members’ club, bars, restaurants, gym, business centre and significantly 75 Airbnb – designed rooms available exclusively on Airbnb’s platform. This collaboration between Airbnb and the building’s owners RXR Realty is set to expand within the US and potentially to London.

The blended approach can draw upon several types of revenue stream. The now well-established global brand Soho House started out as a members’ club for the creative industry in a single location in London’s Soho. Now its locations around the world can derive income from members’ subscriptions, food and beverage spend, spa treatment and gym classes, accommodation through adjoining suites or hotel rooms, co-working income from its recent SohoWorks offer, not to mention sales of its sub-branded SohoHome furnishings and Cowshed products. What binds all this together is a continuing focus on the creative industry and the benefit of its appeal to a wider audience.

Whatever your aspiration – for a single location or global group – working on your brand purpose at the beginning helps you build clarity and distinction for what your offer can become.

So ultimately and somewhat ironically, in this whole new rental-driven world, owning what you stand for will be the most important thing.

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