On Thursday 28th January 2021, deverellsmith hosted a webinar which revealed a dynamic conversation packed with insights, data and intelligence on the multifamily sectors across the UK, Europe and US with market leading speakers:
Mike Altman – Chief Investment Officer, Cortland
Troy Javaher – Head of UK/ Europe, Lincoln Property Company
Moderated by Debra Yudolph – Partner, SAY Consulting.
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This report highlights their key findings.
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DEBRA YUDOLPH – SAY PROPERTY CONSULTING
The USA has undoubtedly one of the most mature multifamily markets in the world, with almost 20 million apartment units across the country, with a total stock value of over $3.5 trillion.
Increasingly now though, the UK’s private rented sector’s fastest growing marketplace, Build to Rent, is seen as an attractive venture for US developers and investors, with a huge untapped market demand and attractive returns on offer.
To put into perspective the scale of the opportunity, Dallas Fort-Worth in Texas, a city slightly smaller than London, has around 500,000 professionally serviced Multifamily units compared to 50,821 in the entire United Kingdom!
So, what can be learned from the success and growth of the Multifamily asset class in the US, and what are the key differences, challenges and opportunities they foresee when investing in the UK?
On 28th January 2021, deverellsmith hosted a 1-hour webinar discussion, in association with Multifamily experts Cortland, Lincoln Property Company and SAY Consulting, to stimulate a dynamic debate, jam packed with insights, data and intelligence on the multifamily markets across the UK, Europe and US with market leading speakers:
Chief Investment Officer, Cortland
Cortland is a major U.S. multifamily real estate, investment and management company with 55,000 rental apartments in 18 cities across the US. Mike is leading the business’s global expansion, with the launch of their UK operation in 2017, where they plan to invest $4.9 billion to grow a portfolio of at least 10,000 professionally managed homes for rent in the UK.
Debra has over 25 years’ experience in residential property including 10 years as Director of Asset and Property Management at Grainger. She is an expert in residential property with a particular focus on the private rented sector.
Head of UK/ Europe,
Lincoln Property Company
LPC is the second largest multifamily manager in the US, with development and investment properties in more than 450 cities in the US, and some 10 cities in Europe. They own 182,000 multifamily units and manage an additional 140,000 under third party management. Troy is spearheading LPC’s UK and European expansion into the Build to Rent market.
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Analysis & Insights
NICK HAMMOND, HEAD OF BUILD TO RENT, DEVERELLSMITH
During the conversation four popular topics were covered to offer insight and understanding from the audience with an attendee participated poll followed by expert analysis from the event panellists. This report reveals results from each poll and key quotes. The topics explored are:
– Development/ Product
– Mangement/ Service
– Brand/ Consumer
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Are the returns of multifamily in the UK being exaggerated?
“We do believe the returns are exaggerated, but we think the returns are exaggerated low. There is upside potential for net operating income as well as the ultimate investor demand of stabilised, cash flow income producing properties.”
“Demand is very clear, but the love affair of the sector is way ahead of the product. Investors need to move up further and take up some measured reasonable entitlement risk and tee up with long term multifamily specialists who understand the upside, but able to mitigate pitfalls along the journey”
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Will demand for different amenities change post covid-19?
“I hope that covid is a short-term event, in all of our lives. But lots of people are being vaccinated and once we’re through this spring I believe covid will be behind us. A quick snap back, not a long-term psychosis of still being concerned of a next potential pandemic. Our behaviours of being in community events, being around other people comfortably, the vibrancy of cities… that’s not gone forever and therefore we don’t need to change these long-term buildings substantially.”
“Key to amenities is flexibility. Multifamily customers expectations are certainly not static, they’re shifting and evolving rapidly. Question is how you stay in front of it during design and delivery (which is a number of years). Do I think they will rapidly change? No. We can adapt with acceleration and amplification, revolving around flexibility. Adaptive spaces that can change hour to hour… yoga in the morning, to co-working at lunch to a pop-up bar in the evening.”
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Can the customer service led culture in the US be replicated?
“Because there are so many multifamily customers in the USA, we are better placed to understand what the customer expectation is. In the UK, it is less known, and the customer expectation is still evolving. We are leading the industry and are part of setting that customer expectation. Some resident experiences are going really well, but some aren’t. We are observing that behaviour and taking lessons away.
“Good design and good product in hospitality have key design elements for operational efficiency whether it’s a hotel in London or Santiago. In the case of customer service, it’s less about reinventing the wheel and more about flawless execution. We are going to go through some turbulence, some ideas we think are great won’t work but it’s about adapting the business model when you get information that it isn’t working.”
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Should the term ‘Build to Rent’ be ditched and replaced with a more consumer friendly name?
“We like to call it home. We think about residential living and whatever happens in the home. What we call it should be focused on the residents and what they are doing every day, which is above and beyond apartment living. That’s home.”
“The term is less important than what we do collectively as a group to educate the market. Ultimately, it takes time but once the product comes online it really will have a differentiating story and will excel the wider education. I l like multifamily as it is the only term which captures the fact that there are lots a different families, and lots of different groups within a building. Its more customer friendly.”