Tag Archives: Student Living

Build to Rent; a new generation of homes.

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Over the last couple of years the term “Private Rented Sector” (or PRS) within the Residential sector has become a buzz phrase in the property industry. In fact PRS is a wide-ranging term; it covers any residential dwelling, new or old, which is landlord owned and tenant occupied.  The new hot topic or sub-sector which is emerging is actually called “Build to Rent”; this is about building specifically for the rental market on scale and operating properly managed developments long-term.

From recent experiences, it seems clear to me that there is still a lot of uncertainty/ confusion about what Build to Rent is really all about within the industry. Furthermore it’s important for the wider public/ occupier market to understand what this is and how its different.

Build to Rent is a totally different offering within the residential sector; it’s set to grow exponentially in the coming years and will potentially disrupt other existing rental models in the sector.

What is Build to Rent? The traditional rental market is predicated on a landlord and tenant basis. Generally each dwelling is owned by an individual and rented by another individual. Often a third party management company will remotely deal with rent payment and any maintenance issues. This could be in the context of a typical suburban house or an apartment within a larger urban block. The rental cost is owner driven and tenants gamble with what the quality of the environment is like, how well they are dealt with in terms of any problems with the property and who the neighbours are; these could be owner occupiers or other renters.

Build to Rent is based on a single ownership of an entire low density housing community, or at the other end of spectrum, an entire large scale urban apartment block. It is a branded and fully managed development with a range of communal internal and external facilities which allow residents to engage/ socialise. The buildings are designed specifically for the rental market and considered fully from a long-term lifecycle perspective in terms of planned, reactive and preventative maintenance.

This approach to residential property is something quite new and unique in the UK, whereas this model exists and is both successful and popular in America and other parts of Europe. Whilst the Government are now trying to promote long-term home ownership, the demand statistics and lifestyles of our population suggest a different trend. Home ownership has reduced by over 5% in the last 15 years, whereas rental occupation has increased by 10% in the same period. A lot of this is centred around affordability, flexibility and choice. (Figures source: Savills, Census 2011). People can’t afford a mortgage until later and want to be more mobile, especially younger occupiers.

Who are the renters? In England and Wales rental properties are occupied by the following groups;

  • 18% families
  • 17% Sharers (including Students)
  • 17% DINKY’s (Dual income, no kids yet)
  • 33% Singles
  • 15% Other

(Figures source: Savills, Census 2011).

Interestingly from my perspective, this new generation of housing is something that has already been tried, tested and is hugely successful in the UK. This is privately built/ operated student living developments. Student Living has evolved substantially and become recognised as an independent asset class now. The quality of new student living developments is generally very good. The same principles and lessons learnt in this sector have very close synergies with the growing Built to Rent sector. Build to Rent isn’t a brave new world, its proven in the UK with Student Living and its proven in other global residential markets on mass scale. The UK mainstream residential market is simply catching up.

So what will these developments look like? The first generation of Build to Rent developments we are seeing are good quality; they need to be for a number of reasons. These homes need to stand the test of time to be financially viable. This is no longer the developer model of ‘build it cheap and sell it fast’, the success of these developments is defined by the quality of the buildings, the environments they create and the way they are operated and managed. People will have a choice and, as with Student Living developments, occupancy levels of whole buildings will be really important to ensure the assets maintain their value and generate a profitable return.

Who will own these housing developments? Traditional development is based on an equity and bank debt funding model in the main, with sales of all dwellings on completion. In a rental context this means larger urban developments have fragmented ownership and can lead to many complex problems, especially when the buildings get older and more maintenance is required.

Build to Rent is based on a similar upfront funding model, and/ or complete institutional funding by private business funds or pension funds. The long term ownership will reside with a single fund; one source of ownership and accountability, with a dedicated branded management platform to control and protect the asset – and residents of course.

The shared amenity facilities within developments can be wide ranging; think of a hotel type offer with laundry services, leisure facilities, communal gardens/ open spaces, lounges, games rooms, cinema rooms, food and beverage offers, workspaces and more. What is included will be dependent on location, existing services in the locale and viability. However the driver is to create a customer led experience where people will want to live.

Community Area

This format of development arguably offers the greatest potential to create and achieve successful placemaking strategies; to form a strong sense of character, identity and community for residents. Build to Rent within high density urban locations will be an opportunity to create proper city communities; this is something I don’t think exists now.

So that’s a brief summary of Build to Rent. It’s here, it’s happening now and I think we will see much more of it in the near future.

Our business is involved in a wide range of Build to Rent schemes at present, mostlof which are urban high density developments. One which is attracting a lot of interest is with The Collective at Old Oak. This project is a niche ‘co-living’ development which is targeted at young professionals. More to follow shortly on Old Oak; it’s an unheard of location in London which is set to change substantially.

Side Front View

The Future of Student Housing; whats next for the sector?

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I’m privileged to have been asked to speak at a major Student Housing conference in London today. The Property Week hosted event is in it’s 8th year and has sold out; we can expect to see well over 500 people there. I’ve spoken at other industry events on Student Living, but this is my first time here – and its widely regarded as the big one.

New Student Living project by WCECOne of WCEC’s current projects; currently in Planning.

It’s been another incredibly strong year for UK Student Living. It’s anticipated that the year will close with over £5.7bn of investment recorded; that’s bigger than ever before. However almost all of that is transactional activity of existing operational assets, not new development supply. There is still strong interest from investors and developers in building new product, but there are some challenges to overcome.

Most major university cities have strong supply already. There will always be opportunity for growth and diversification, but its not simple to do, despite what some might think. Location, location, location remains a major factor for Student Living; it is housing after all. Beyond that the image below outlines some of the issues which are affecting the viability of building new Student Living at the moment.PowerPoint PresentationThe basis of the problem is that the required capital investment is outweighing income potential, especially for the lower-mid level “affordable” offer.  This is arguably where the greatest volume of demand exists. It’s become much harder to make the numbers work. But some, who know what they are doing and create an angle, can make it stack up.

Premium/ Studio led projects work, with weekly rentals of £250+, but only a small proportion of students can afford £10k a year to live in an ultra cool pad. They also have their tuition fees and living expenses which could easily add another £15k to that.

In my talk and panel session, we’ll be exploring how developers can create a competitive edge through design led schemes. This is recognised as a key differentiator now, but its easy to make mistakes and follow established trends which wont create a distinct angle. I’ve seen some great projects delivered this year, in the UK regions, in London and also in Europe. Quality is consistently high on the agenda, but its so easy to overspend on delivering it – and in areas which are unnecessary I think.

Despite public perceptions, students are discerning customers, with needs and demands which reflect hotel quality living, as apposed to the traditional student digs – or a hostel type offer. They want to be engaged in a community environment which blends living, relaxing, socialising and studying. These are the essential ingredients for Student Living. Some of this is physical, but some is about the brand and the operational function as well.

The  challenge we all face in delivering new student living buildings is to create something which delivers quality in all areas, but which is also commercially viable and realistic. To do this takes experience and skill; it will consist of a considered blend of design, space, specifications and also operational strength.

My talk concludes with four areas which, in my opinion,  define how design can give new student living buildings a competitive edge…PowerPoint PresentationYou can see a copy of my presentation in .PDF format by  clicking on the image below…PowerPoint PresentationYou can also read an insightful Property Week publication on the changing dynamics of the student living sector by clicking here.

 

Want to talk more about student living design?…

WCEC Architects are working on a range of really dynamic student living projects at present; for both private developers and universities alike. Some of these are new-build, others are refurbishments/ conversions. We are designing new concepts which explore compact living ideas, along with reinventing the traditional cluster apartment. We are also designing premium studio led projects with market leading providers. The fact our team have been involved in over 16,000 beds in the last ten years demonstrates to our clients that we know our stuff. We can create and add value. You can contact me by email by filling out the form below

Student Living Design in 2015

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Next week I will be speaking again at a national student housing conference in London, hosted by LD Events. My talk is focused on Student Living Design and I’ll be exploring the changing learning and living dynamics for ‘Generation Y’ in University life.

There is no doubt that technology has a huge influence today, in a social context and also in how people learn/ study/ work. The formality of how we use physical spaces has changed significantly as the boundaries between our day-to-day activities have blurred. One of my most productive workplaces is actually on the train to London.

So what’s new in Student Living? The sector has continued to evolve as the competition has increased between existing and lots of new operators in the market place. I suspect a lot of people will still associate student living with basic halls which lacked any real design or identity. The reality is very different now.

Modern student living developments are seeing more architectural quality externally, and much better quality and design focus internally. Generally most new developments seek to align with student aspirations and expectations in their look and operation. The major focus is now on creating an outstanding ‘student experience’.

Living formats range from premium studios, twodios (2 beds with a shared compact kitchen), twin rooms, townhouses and of course the traditional cluster apartment/ bedrooms. The latter is where the demand remains, as this makes up more than 80% of the market, and is generally the most affordable.

A standard bedroom will now typically include; a larger bathroom pod with a defined shower enclosure (no more wet rooms or shower curtains), more storage space, linear desks, a 3/4 sized bed and larger windows. The finishes and colours are much more modern too. Whilst there has been a push for smaller compact room formats, we are also seeing larger rooms emerge as well.

Student Room conceptResistance is growing to address the visual impact of the long institutional corridors which enviably exist in these buildings. They can often be a monotony of identical doors! The use of feature finishes/ colours, recessed doorways, daylighting (where possible), signage and lighting all improve these spaces dramatically. There is also a growing trend towards forming small break-out spaces within the general circulation areas to allow residents to meet, relax and dwell.

Two big areas of operational progress in the sector, which directly impact upon design, is branding and a more hospitality led approach to student living.

Operational reputation is so critical now. It heavily influences investment for new development and is a big decision factor for universities and students alike in the hugely competitive marketplace. Reputation is measured by performance, satisfaction and occupation/ retention levels. All are equally important. If a student takes to Twitter to vent their frustrations about something, the operators have to respond instantly.

Operators now (finally) recognise how important brands are to young people. A number of existing operators have dropped their corporate look to promote a fresher impression which is focussed around lifestyle. Within the buildings, the operational focus is much more aligned to hotels now. The intention is for residents to be treated as customers and communal facilities to promote social interaction and a range of activities.

In some early student living developments I have designed, we would provide common rooms. These would typically include pool tables, vending facilities and seating, but they were rarely used. Why? Because there wasn’t a desire or need to be in that space.

Student HubVITA Student leading by example : Hub space

Now common rooms (now referred to as ‘Hubs’) have large reception spaces, coffee lounges, games/ media rooms, TV/ Cinema lounges, Group study spaces/ private rooms, Private Dining facilities, gym facilities and more. These spaces are aspirational and lifestyle focused. They are there to promote and create a social community.

receptionVITA Student leading by example : Reception

So what else is affecting student living? The boundaries between private residential apartments and purpose built student living continue to blur, especially with the surge in Permitted Development rights for Office to Residential conversions, and also the rapid rise in the Private Rented Sector/ Built to Rent. The latter also focussing heavily on well branded, aspirational, lifestyle managed living for young people. In part PRS is very much about continuing that standard set by Student Living for the next step in life; ‘Graduate Living’. I can see the potential for this emerging as a specific branded offer.

Another influence which is growing is sustainable design. This is led by statutory legislation in the main, but the bar keeps rising and therefore the need for the sector to embrace sustainability is becoming critical and increasingly expensive for developers. It surprises me that nobody seems to have seen the opportunity to create a point of difference here, a bit like M&S and their PlanA initiative.

So the conclusion here is that student living is very much about excellent quality design in 2015 and beyond, both in terms of the architecture and the internal environments. The skill however is in being able to balance design with commercial reality in terms of development/ financial viability. This is where sector experience, in both the design and delivery of student living, becomes so important when selecting an architect.

We  have a dedicated Student Living team at WCEC, with years of experience and thousands of beds delivered. We are currently working on over 2500 beds across numerous projects, both on and off-campus, all over the UK.

If you want balanced, pragmatic and informed advice on the very latest Student Living design concepts, please don’t hesitate to get in touch. We love talking about Student Living!

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The value of writing blogs

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It’s my little blog sites third birthday this week! In that time it’s had over 65,000 views, amazingly from every corner of the world too. 33,000 views were in 2014 alone and I posted 37 blogs over that period. Today’s post is my 100th in total.
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Writing posts on my blog is something I’ve enjoyed doing, albeit finding time to write them is a challenge at present! However, I still get really positive comments, very regularly, from people I know and see on my business travels. It’s also something people mention when I first meet them which is good I guess. I conclude from the above that people seem to have enjoyed reading a few posts over the time and therefore I should keep blogging.

In my experience blogs are a really good way of growing and maintaining your profile, whilst also conveying a personality and public voice on issues which are of importance or interest to you. It’s also very good for promoting your business generally which is what’s really important to me.

I’ve tried to keep my content varied, but mostly architecture/ design focused in some way. Last year I recorded just under 2400 views on one day in May and the most popular post that day was WCEC Student Living Launch. Since then we are now actively engaged on four major Student Living projects, with a number of other potentials in the pipeline too. Of the four, there is a real mix of design/ delivery, refurbishment, new-build on and off campus. I’m really pleased with our business growth in this key sector at WCEC over the last year. We now have a dedicated team driving this sector and we are using Revit of course to maximise our efficiency and outputs. I’m still developing some new design concept ideas as well which my clients always like to discuss.

A couple of blogs last year also got me some wider (perhaps unintended) public attention…

There is a proposed housing development in Allestree where I live. It’s on open farm land and has attracted a lot of local resistance! I posted a blog on it back in July and a week later I had been invited by our local MP to stand and lead a talk in front of 200+ people about the Planning process. I was happy to do this, but I didn’t get drawn into the big ‘Say No’ campaign! For me I think the outcome is inevitable. Click here to see the blog.

More recently I had what I’d describe as a ‘parking episode’ at Derby Railway station which, quite frankly infuriated me. I’ve tried not to use the blog as a means to rant openly, but I wanted to make my point publicly after the way I’d been treated. Click here to see it. This post ended up, word for word, across two pages in my local paper and I got lots of social media/ online comments about it. Incidentally, that issue with East Midlands trains ended up with me paying a £35 parking fine and receiving a £50 reimbursement for my late train which I opted to pursue for the first time. I wonder how much the issue cost East Midlands trains in negative press and administration time!

Anyway, back on to more positive things again – thanks very much for calling in over the years and reading a few blogs…hopefully I’ll be able to keep them coming in 2015. I do always really appreciate the feedback too. I’ll be back again soon…

WCEC Student Living launch

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I have spent a number of years now designing and delivering contemporary purpose built student accommodation developments for a wide range of clients. In all I’ve overseen the delivery of around 14,000 beds to date.

Today I’m heading down to London to speak on a panel at a national
Student Housing conference hosted by LD events. This event pulls over 300 delegates to discuss the sectors activity and predictions for the coming year. I’ll be speaking about design evolution and also the emergence of branded environments in Student Living.

This week is quite a big one for me actually. WCEC have launched our Student Living sector and team following a number of new project enquiries since I joined the business back in March. We have a very strong offer through our sector specific experienced team of around 15 design and technical staff, amongst our 120 strong overall team. The team have been doing some work recently on developing some new concepts for Student Living as part of this launch. These designs focus on specific details to promote efficiency of optimised use of space.

20140515-073917.jpg

Also this week, I have accepted an initiation to sit on a development sub committee for the British Property Federation Student Accommodation group. This is led by Richard Simpson of Unite Students and Charles Marshall of Liberty Living. I’m delighted to be contributing to this important and influential work. The BPF team engage with central government on all Student Living and Higher Education related policy matters.

According to Universities UK’s latest UK-wide study on the impact of the higher education sector on the UK economy, universities now generate £73 billion in output – up (24%) from £59 billion when the last study was published in 2009. This puts higher education ahead of many other UK sectors, including basic pharmaceuticals, air transport, advertising and market research, legal services and computer manufacturing.

Student Living, alongside Higher Education, is now being taken very seriously. It’s matured as an asset class in its own right and will continue to form an important sector within property.

You can read a bit more about this news on our website by clicking here.

If you wish to learn more about our business, our student living design ideas or our new team, please don’t hesitate to contact me. My email address is nick.riley@wcec.co.uk

The financial value of Student Living

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This week is the annual Property Week Student Accommodation conference in London. It’s attended by around 500 property professionals including; investors, developers, operators, universities, contractors and consultants. Some refer to it as the annual group hug where we reflect on how the sector/ asset class has performed in the last year and what might be in store for 2014. There is no doubt that 2012 was a tough year, I blogged about it – click here to see it. But this year is looking much stronger again in terms of occupancy levels, despite some major headlines with Opal Property Group going and others re-structuring their finances at present.

Bouygues_The Meadows_Essex University_┬®Hufton+Crow_028So what is all the fuss about with Student Living and why has it remained so resilient during the last five years, while most of the property/ construction sector has been slow? Well here’s some numbers which give some context to the scale of the sector today…

  • There are around 460,000 purpose built student living bedspaces now in the UK, in circa 860 buildings.
  • The number of full time students for 2011/12 was 1.72m and this has risen steadily over the preceding years, with an overall increase of 20% in the last ten years.
  • Universities own around 50% of the student living property market, with the balance being private operators. Just a few years ago, the ratios were much higher for Universities (70-80% of market share).
  • The average weekly rent for a bedroom in a purpose built student living development is now £110+, with London fetching over £180 (this equates to between £4500-£7500/ year minimum). There are high-end rentals in London of £500+/ week (£21k/ year).
  • The sector has seen over 1.6 billion of investment activity since September 2012, accounting for 30,000 beds.
  • Applications to study in the UK increased by 3.1% up to June 2013, the highest number since 2009.
  • Overseas student numbers are expected to increase by 15-20% by 2018 which will generate £3.9bn in tuition fees for Universities.

(Sources: Deloitte Student Housing 2013 and GVA Who owns student housing?)

So what does the ‘average’ student spend in a year? Here’s a basic overview;

  • Up to £9000 in tuition fees (UK students).
  • Around £5000 in accommodation costs.
  • Around £5000-6000 in living costs.
  • TOTAL = £20,000 (x3 years = £60k for a degree)

If you multiply this annual figure by 70% of the total 1.72m students (allowing for internationals and live at home students), you generate a figure of over £24bn. That starts to give some tangible scale to the ‘value’ of students.

P1030184For accommodation only, the annual figure is around £2.3bn based on the 460,000 bedspaces.

So where are the opportunities going forward? As you’d expect with property, its all about location. All of the UK Russell Group University Cities are well provided for, especially as these locations tend to have multiple institutes to serve, which provides investor confidence. Nottingham has one of the highest concentrations of privately owned beds (90%), although this figure will be skewed by the fact that UPP own most of the on-campus stock at both the University of Nottingham and Nottingham Trent University. Oxford and Cambridge only have 10% privately owned provision, but that is influenced by difficult Planning conditions and land values. Brighton and Norwich are among the strongest potentials for growth.

Knight Franks latest report, Student Housing 2014 can be seen here. This again reinforces the strength and continued investment potential in the sector.

To date, our practice have designed and delivered over 14,000 bedspaces for student living. This equates to around £500m of construction activity! See a small selection of our recent projects here. Or contact me to find out more | nick.riley@lewishickey.com

Big numbers when you start to add this up. That is why this asset class has become so important and is still attracting strong investment.

Next Generation Student Living

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I’ve just got back from London after attending the LD Events Student Housing Conference at the Congress Centre. I’ve been to this annual property conference for the last four years. This year however was slightly different as I was asked a few months ago to deliver a talk on ‘Design and Innovation‘ in the sector. This was a great opportunity for me and Lewis and Hickey to demonstrate our extensive experience and understanding of this impressive and mature asset class.

We have delivered over 11,000 bedrooms to date and have around 5000 bedrooms in development. These are pretty big numbers for us and it puts us in a small group of other Architects who have delivered this much.

P1Last night we had a great dinner with close colleagues from Jones Lang LaSalle, Savills, Interhospitality, HG Capital Investments, Balfour Beatty, Regal Property, Kaplan Colleges, Bouygues/ ULiving and Campus Living Villages. It was a good blend of people and backgrounds, with some informed and stimulating discussion on current opportunities in the sector.

The mood at the conference was pretty upbeat overall. The sector has been a bit ‘down’ following a perfect storm of challenges in 2012 which resulted in a reduction in student numbers and occupancy. For the sector this was a worry as suddenly national operators were reporting 85-90% occupancy when 98%+ had been the norm for a number of years. In the wider context, these dips were minimal, especially when you consider 100% asset voids in retail, industrial and office at present. Student Living is still attracting growing and significant investor interest with strong yields to be enjoyed.

The other big news, and recurring discussion today, was about Opal’s recent demise. I blogged about Opal a few weeks back (click here to see it). It was really good to hear both Bob Crompton and Charles Marshall reinforcing that Opal is/ was a strong and well respected business, and that their assets have never been distressed. Their problem was around their funding model and there was a genuine disappointment that Opal have paid the ultimate price. The impact of Opal seems to be strengthening the sector, rather than compromising it as some people were concerned about. Their operator brand strength though has suffered because of all the media coverage. As a result; Universities, Parents and Students will probably avoid Opal accommodation this coming year. This is unnecessary, but people will have their view on this. It was also good to see so many (ex)Opal people at the conference, all still working in the sector in different ways.

In my talk I focused on Branding and “student experience”, the evolution of interior design ideas/ products and the progression of design quality in the architecture. Student Living design has changed significantly in recent years and I believe we are now firmly in a second generation of design/ product.

Following my talk, I was a little overwhelmed by how many people acknowledged and thanked me for my summary. I didn’t anticipate this and I was humbled by the kind words. A couple of people have asked me for a copy of the presentation so I thought I’d post a link to it on here.

CLICK HERE TO VIEW MY PRESENTATION (it’s 7mb and in PDF format).

It was good to see so many close contacts at the conference, the sector has a real property ‘community’ and I feel privileged to be part of it, both personally and of course for my business Lewis and Hickey Architects.

In conclusion; it was a great event to be part of, and of course even better to meet many established contacts and also make some new ones. If you are looking at Student Living development and need some advice, or want to explore some design ideas, please don’t hesitate to get in contact with us. Some of our recent projects can be seen here.

You can also contact me directly by email nick.riley@lewishickey.com, I’d be delighted to talk to you.