Build to Rent (BtR) investors and operators are adapting to the Covid environment, employing new strategies to maintain rent collection and occupancy levels, and operate buildings effectively under changing lockdown restrictions.
How are investors and operators adapting?
- Pricing Strategies - since lockdown, occupancy levels have dipped and lease up rates slowed, with London being more affected than the regions. In response, operators have adopted a range of incentives, such as rent-free periods and flexible pricing to maintain occupancy levels. Some investors are considering pricing initiatives focused on specific demographics, such as students or key workers.
- Flexible tenancies - whilst many operators already offered flexible lease terms, this has become more important in securing tenants in an uncertain market.
- Day to day - operators are ramping up cleaning provisions, moving on-site staff into the building, facilitating contactless move ins and adopting virtual leasing. Even with restrictions easing, these initiatives are becoming part of the day to day norm.
- Adapting to changing work patterns - there is an increasing focus on incorporating flexible office space into developments and providing space to work from home. Some BtR operators are trialling work from home furniture packages.
- Amenity – with amenity closed during lockdown, operators had to think of creative ways to offer services safely whilst retaining a USP. Much of this was offered virtually, such as online fitness classes. Now amenity is opening up, operators have introduced new processes to ensure communal spaces are used adhering to social distancing rules. For example; booking specific time slots for particular areas, increasing cleaning and signage, spacing out equipment /installing perspex barriers in gyms.
Building on Brand Loyalty
- Sense of Community - this theme has resonated in particular, with the creation of online communities to bring tenants together virtually and operators providing platforms for residents to engage. From book clubs, cooking classes to quiz nights – resident engagement has never been higher.
- Health & Wellbeing - operators are prioritising wellbeing and fitness initiatives to help residents stay physically and mentally fit amid the pandemic.
- Responsible Landlord - through working closely with tenants in hardship and adopting fair and flexible approaches, this has been an opportunity for BtR to build on a positive image and public perception as a responsible landlord.
We have seen institutional investors and operators employ a number of strategies to function in a post-Covid world and it has provided an opportunity for BtR to build on their brand loyalty to attract and retain tenants. The power of the brand element cannot be underestimated - Moda Living launched the final phase of its Angel Gardens development in Manchester during the pandemic resulting in a 25% corporate pre-let to a global company, with health & wellbeing and work from home capability being key USPs.
With a changing tenant demand, we could see a migration from city centre apartment living to suburban family houses and the ‘Single family Housing’ rental model is gaining traction from investors looking to diversify residential portfolios further.
The key theme however is flexibility, and those who continue to adapt to a new normal, will be best placed to ride out the Covid-19 storm.