Chapter 6: Industry Insights
Quality, service and placemaking

ARL CEO Brendan Geraghty reveals the new priorities for BtR design

Against a backdrop of Canary Wharf's most prominent Build-to-Rent (BtR) schemes, Tall Buildings Magazine Editor, Hannah Woodger, caught up with Brendan Geraghty, CEO of the Association for Rental Living (ARL), at the association’s flagship conference in November to explore design priorities, operational efficiency and the rental sector's evolution.

HW: What design features and amenities are most important in Build-to-Rent buildings to attract and retain residents?

BG: There are various statistics on what specific amenities attract clients – it depends on your location, the type of building and a whole range of factors. The most important thing we need to shift from the 'for sale' world and culture is customer centricity. This means recognising that the source of income is the resident, and looking after them means looking after your money.

There's a range of amenities that can deliver this, but the most important one isn't really an amenity at all – it's a service: customer service. Responsiveness is key. If the resident reports a problem, it needs to get resolved within a reasonable timeframe and with lines of communication open at all times.

As for physical amenities, various studies have shown which are most popular – gyms and coworking spaces typically rank highly – but again, it depends on your location.

The most important thing is understanding consumer culture and how it applies to residential property. Consumer culture and residential land weren't friends for a long time, and then Build-to-Rent came along and made them friends.

HW: How do operational considerations for rental buildings influence design compared to build to sell?

BG: Hugely. Net operating income (NOI) is what investors look for, and operators are under pressure to grow their NOI.

Build-to-Rent is operational real estate in the same way that offices and hospitals are – we understand those buildings are operational, with somebody on site managing them constantly. Residential land typically doesn't have that operational mindset because in the sales world, you buy your apartment or house and it's up to you to manage it. However, with Build-to-Rent, design plays a huge part in operational management.

Take bin stores, for instance. Architects will place them according to regulations because compliance is important. But if you position your bin store in such a way that I have to employ two people to move the bins for collection, that's a cost to my business that hits my bottom line.

That dynamic of operational efficiency and revenue generation is only starting to be understood by designers. It's not just about the distance from bin store to truck – it's also about maintenance costs, health and safety deployment, customer experience and balancing onsite staff versus digital interaction.

There's no one-size-fits-all solution.

HW: How are architects coming to understand these features unique to the BtR market?

BG: What we're seeing is that designers and success in CapEx land has been the dominant focus – get the building up and running, then everyone walks away. Whereas in Build-to-Rent, it's a long income game, from 30 to 70 years, so operational design is rising in importance.

OpEx used to be the poor relation by a long margin in residential space, but now it's gaining prominence because major investors are saying, "I'm tired of buying a building I have to spend so much time improving to get it to operate efficiently. Please, can you get this thing to operate efficiently from the outset?"

We've got a long way to go, but I'm pleased to say most architects and design teams are getting there. What we really need is for operators and investors to insist on engagement with the design process, which is what we advocate constantly.

HW: In your opinion, what minimum standards and design quality standards should tall rental buildings meet?

BG: Some of this is regulatory, but we would point to the emerging Decent Homes Standard. Whilst it's not prescribed yet, we suspect it will be fairly shortly, and when it is, that should be the minimum standard.

But I'm actually a strong advocate for a review of quality standards in housing. If we look at the space standards, I think they're working against us now. Area does not define quality – area defines area. Design, and good design, defines quality. Current standards are preventing innovation and stalling our ability to respond to how people behave in buildings and want to live these days. They really need to be changed as soon as possible. You'll start to see some noise about that going forward.

Quality is the hallmark of Build-to-Rent. That's what we do. But our quality spreads beyond just the physical attributes of the building – it encompasses quality of service, quality of placemaking, and the quality of the building as a whole, including its liveability. We define quality very broadly, but if we had to return to the status quo regime, it would be the Decent Homes Standard as a minimum.

The ARL has created a code of practice and customer charter for the sector that includes a commitment to quality. We need evidence that

you're producing a quality building, and there are various ways to demonstrate that. The point of the code of practice is to establish trust – trust with consumers and trust with Government. We're committed to working at this standard. No other sector, apart from PBSA in the residential space, has developed a self-initiated code of practice.

HW: Going back to placemaking, how is the association ensuring that BtR stock positively contributes to placemaking?

BG: Look out the window – this is the Canary Wharf estate. When it comes to curating and creating placemaking, I think this is going to be known as a bit of a masterclass. Everyone assumes it's only for the wealthy financiers who work in the banks here, but it has now become a destination in its own right.

Quality is the hallmark of Build-to-Rent. That's what we do. But our quality spreads beyond just the physical attributes of the building – it encompasses quality of service, quality of placemaking, and the quality of the building as a whole, including its liveability."

They do more events and activities with the local community living within a quarter mile of the campus than they've ever done before, because they recognise the value of community and belonging.

Placemaking can be confused with only the physical attributes. The physical attributes are important, but it is the activity that those physical attributes enable that’s really the secret sauce in placemaking.

Placemaking as purely a physical design exercise is limited. Placemaking with community activity, business activity, retail and events is what will be successful.

HW: In your view, how might you see the rental living sector evolving in the next five years or so?

BG: I think it's important to recognise firstly that the rental sector generally – and I include the private rental sector in this, not just Build-to-Rent – is the laboratory, the creative incubator of housing evolution. But it's not given any credit. What I mean is that every housing product we see out there was born in the rental world first, before it became a 'for sale' product. Rental invented HMOs. Rental created the Cadbury Estates, which built houses for workers.

Moving into the 21st century, we have co-living, Build-to-Rent, single-family rental and later living – all rental products. The latest innovation with Build-to-Rent is customer service layered on top with amenities.

Social infrastructure will be the new amenity arms race and this will further strengthen BtR’s relationship with the local and in-house community.

The other issue is cultural legitimacy. 20% of the UK population rents, and they're also potential voters. There's Help to Buy, but there's no ‘Help to Rent’. I think the Government needs to wake up to the fact that they have a huge cohort of renters who deserve some support, considering what renting has contributed to the UK housing economy and continues to contribute. We need to stop being castigated and demonised.

We're also going to see diversity of product, a diversity of subscription living models. We'll see things like old office buildings being extremely well suited to adaptation – perhaps to co-living more than Build-to-Rent.

We're going to see a huge focus on the people part of the industry. When you ask property professionals what value looks like, they say it's the value of the asset. If you ask someone on the street what they think is value, they'll talk about community and people interaction.

In rental, because we're consumer-centric and we understand we need to look after our people, we'll see huge investment in understanding human behaviour, behavioural economics and psychogeography to ensure we create the products people want.

The future, I think, is to legitimise renting, to make it culturally appropriate, and we'll see it producing products appropriate to modern living.

behavioural economics and psychogeography to ensure we create the products people want. The future, I think, is to legitimise renting, to make it culturally appropriate, and we'll see it producing products appropriate to modern living.

HW: As an advocate for offsite technologies and modular construction, how do you see industrialised construction playing a part in the future delivery of BtR?

BG: Build-to-Rent has already put its money where its mouth is. If we look at who's doing volumetric modular at the moment, it's primarily Build-to-Rent. Long Harbour did it recently in Walthamstow, Greystar did it in Croydon, as did Tide Construction.

Modular construction and the green agenda are absolutely part of the Build-to-Rent agenda. It's horses for courses – it won't work every time, but we met with Dame Judith Hackitt and she wants to see more modular. She believes modular is the way to deliver safe buildings. We advocate, along with her, that a safe building is a sound investment.

If modular is one of the ways to create that sound investment, then we need to get behind it. That's going to need help from Government. We need our insurers to be more open to understanding modular and its benefits. And, of course, the green agenda loves modular because we can control carbon and reduce waste.

It has a lot going for it, and it's always frustrating that not enough modular – whether 3D, 2D or other forms – is used. But the picture is improving, albeit slowly.

HW: What do you perceive as being the key hurdles for the sector at the moment?

BG: The focus of the industry is the Building Safety Regulator, because everyone has been hurt by its inefficiency – there's no getting away from that.

But as was revealed in ARL’s roundtable last autumn with Dame Judith Hackitt and 30 senior Build-to-Rent investors in London, investors are 100% behind the Building Safety Act. They see it having huge value.

They're frustrated with the process, but not with the product, and there was general acknowledgement and absolute support for it.

The regulator has got it wrong. They know they've got it wrong, and they're addressing it. In two or three years, we won't be having this conversation because it will be more predictable and timescales will be reduced. But at the moment, people are rightfully annoyed. It's costing a lot of money.

We didn't have a safety regime before. Now we do. Ultimately, that safety regime is going to attract investment, even if in the short term there are concerns about delays. Long term, it's going to be an asset.

www.thearl.org.uk

A decade of dedication to the rental sector

Celebrating its 10th anniversary this year, the ARL is the recognised membership body for the BtR sector and its subsectors, delivering an increasingly amplified and unified voice for purpose-built rental housing. Its vision is to redefine rental living through the global transformation of the sector, pioneering a world where exceptional, sustainable rental homes are a first choice for residents.