Why Build-to-Rent Needs a Unified Vision with Mitch Hammond (OnTheMarket)

SPEAKER_01 0:03

Welcome back to Pillow Talk Sessions. I'm Christian Lipinski, and as always, I'm joined by my co-host, Jessica Gillingham. Now, today we're joined by Mitch Hammond, Build-to-Rent Manager at On the Market, to dive into the evolving build-to-rent sector.

SPEAKER_03 0:18

I'm really excited and looking forward to this conversation with Mitch because he's a wealth of knowledge about build-to-rent. And we're going to talk about the importance of defining build-to-rent, the balance between technology and human connection within operations, and then also lessons that the sector is learning and can learn from student accommodation.

SPEAKER_01 0:39

And we'll also be discussing the shifting resident expectations on how operators can stay ahead in this competitive market.

SPEAKER_03 0:47

Hi, Mitch. Welcome to the show. Really, really pleased to have you here. Before we sort of get kicked into our conversation, can you give our audience a little bit of information about you and a bit of your background?

SPEAKER_00 1:00

Yes, absolutely. Yeah. Thanks, uh, thanks again for having me. Um, my background is a little unusual to most sort of property experts. Um, I actually started my journey sort of accidentally. Um, I went to university and before that um I studied uh in Western Super Mayor and Bridgewater College, studying actually performing art. So I was a borum dancer for 10 years, um, going into contemporary dance at university and then moving into property after unfortunately having uh a spinal accident. Um, but luckily, due to the relationships I had and made at university, a friend of mine referred me to one of the largest estate agents in London, uh, which then sort of my career then blossomed from there, really. Um, and then sort of fast forward to today, I sort of grew a passion for built-to-rent from a state agency doing lease-ups and then moving into uh an asset management role, really learning from the ground up of how a rental development is built, um, going through all of that mobilization journey to fully leasing the development and then moving on to the next asset essentially. So, yeah, really exciting background. Met some amazing people along the way, and yeah, very fortunate to be in the position I am in today where I'm in sort of the marketing side of built-in and actually looking at um things like demographics of the development, looking at uh age groups and and really where those rent is actually coming from, um, rather than just looking inside the city. So, yeah, really exciting background and yeah, great to be here.

SPEAKER_03 2:41

Yeah, brilliant, Mitch. And it's it's interesting, you're not the first guest we've had that comes from a creative performing arts kind of background. I wonder if there is some sort of linkage there between dancing and property. Not quite sure what it is, but that there must be something there.

SPEAKER_00 2:58

I like to think I'm a bit of an extrovert, um, and I like to think that most of my sort of dancing friends are sort of outward people or outward-facing people, and I think definitely there is those transferable skills into the hospitality sector. Um, not necessarily just residential, but uh I've got a lot of friends that work in sort of the cafes, serving people on that side as well as um people that work in the sort of music industry now. Um, so there's definitely those transferable skills. Um, it was a big step from being a dancer to learning property, but learning at one of the la London's largest real estate firms gave me the all of the tools to sort of start my journey and then sort of grow a passion about build to rent.

SPEAKER_01 3:44

No, it's uh it's a really interesting background, and uh, I agree, you know, having that creative side and being an extrovert is uh very similar to me, you know, uh, and it's about building relationships. So, whatever industry you're in, uh having that skill set is vastly important. Uh I wanted to kick off today's conversation, um, you know, because we're talking about build to rent. And previously to this podcast in this series, I wasn't too sure what build to rent was. And I'm still kind of learning what build to rent is with all the discussions we're having. So, you know, with this terminology kind of varying across the industry, you know, why is it important or how, you know, how can we work more towards this unified understanding of what build to rent is? And, you know, secondly, why is this important for operators and residents to have that same understanding?

SPEAKER_00 4:32

It's a very, very good point. And one which I think is still not covered. Build to rent now has existed for at least the last five years as a known asset class. But it really is hard for renters to actually understand it. Uh, in the US, it's a it's a known asset class. Multifamily, it is a known asset class because everybody is speaking the same language. Whereas in the UK, if we push build to rent as a known term, the residents and the renters might get confused. So what has been happening is that people know the brand more than they know the asset class, which isn't such a bad thing. But with the imbalance of supply and demand in the UK, build to rent is going to be the option of choice, whether it's your multifamily, large-scale big development, or it's an old office building that's been converted into co-living. Um, or more so now, because of the the lack of sales demand, is a single-family housing market. We've seen that evolve rapidly, where large-scale developers are not selling, they're you know not affordable housing homes, so you have big large funds coming and taking those and creating communities around those houses. So it that there's no real way in the UK to define it, which is why I like to think if you look at the benefits of the product, then push the benefits out to the renters, and they will then naturally understand what build-to-rent is. So we're very fortunate to have in build-to-rent developments now is all of those amazing amenities. So you would naturally have a co-working space, a gym, and potentially uh another room, which could be made up of uh a private dining space where you can book out those, uh book out the kitchen, potentially hire a chef and throw a birthday party or a gathering or a work event. Or it could be that it's there there's a cinema, um, and then you transfer that and use that multi-purpose as a games room or again for presentations for to hold a work event or to hold an inside event. So we really have to, as experts in the sector, have to be always be looking at how do we push the benefits to be able to create build-to-rent as a known asset class in the UK. And when we get to that stage, I think built-to-rent will be a known term and it will really blossom in the rental sector.

SPEAKER_03 7:12

So it's it's really the way we talk about build-to-rent and continue to kind of define the asset class, it will change the way residents and consumers, if you like, um, engage with the product and what they expect you know when they go there. Is that what you you know you'd like to see happen a bit more?

SPEAKER_00 7:33

Yes, absolutely. It it if we sort of look back 10 years ago, it would usually be a block of rental apartments, no amenities, there would be some parcel storage space, um, there would be security in terms of like security cameras, and then that would be it. There would be nothing else included within the rent. Possibly you might get a balcony, but more likely so you probably wouldn't, as the it would usually be built by an SME developer who was literally looking to hold that asset class and use that as a rental asset. Fast forward to today, where you've got all bells and whistles around the amenity, and it's really changed in terms of it's no longer a development, it's either a neighbourhood because it's transformed the area. So if you look at places like Wembley Park, if you look at Athletes Village over at uh Stratford, those are their own neighborhoods, or you've got a community, so it's really about the language again, and I think you talked about it there, Jessica. It's the language of what we're speaking to be able to understand the development. And once we understand that you're living in a community, not a rental block or of apartments, that affects the churn of the development as well. So people tell their friends, they then recommend to somebody else, and then it becomes a known asset class because of all of the benefits. The highest standard of living is definitely there. Um, having seen over 50, 60 built-or end developments, the standards are definitely there. You walk in, you're greeted by you know the nicest person on the reception desk. They really walk you through, they take you through and say, you can do this, you can do that in those areas, and that's amazing to see. But also, are they understanding that it's not a just a block of apartments and that you are part of a community when you rent in a build-to-rent development?

SPEAKER_03 9:34

Absolutely. It's about getting the residents to really love where they live rather than just be, oh, I live here because I gotta live here, or or or you know, I live here because it's it's what was available at the time. It's that kind of real loyalty to the place that they're that they're living because there is that community. One of the things that we really like to explore on this show is around how hospitality principles are, I want to use the word infiltrating, I don't think that's quite the right word, but how hospitalities are principles are informing the service living sectors. Like you said, you know, having someone really great on the reception desk, having really good shared spaces that people want to spend time in. So that's one of the things that we're really interested in exploring because we're seeing you know the change around it not just being a unit or a building, it is much more than that, it's an experience. Um, and one of the uh things that we'd love to explore with you is that is actually not because do you put things like co-living and the single family housing within build to rent? Like, do would you do you put them under that umbrella term?

SPEAKER_00 10:49

Absolutely. I do because they are uh they're both assets built for rental living. Um the the way that the government sort of describes those sort of asset classes is very, very different. Um, if you look at BTR, it's purpose-built rental development. If you look at uh co-living, it's large-scale service department. Um and I think if you look at the single-family housing, they are just new build houses to rent. But the difference there is the then the perception. And if you're viewing that online, um you're always sort of trying to quantify your rental prices because they're premium. So it's it's a difficult one. I think that there's definitely a you know, segments from the hospitality sector, like we mentioned already, where you don't have a concierge, you have a community service manager and somebody that can be do multiple roles, so they also arrange events, they know the renters, they know the residents. So I think it that there's you shouldn't sort of drift away from uh from a marketing perspective. I'm talking about that it's all called built for rental living, which is uh on our platform on the market. Um, if we then start moving or start shifting, and then you know, other sort of forms evolve, then there's a danger that we lose the actual overall description. I think going back to the American market where it's called multifamily, it's a much different market, and much that market has matured much faster than ours because everybody's been singing off the same hymn sheet. Whereas in the UK, you've got BTR, you've got purpose-built rental developments, you've got new build developments, you've got single family. It's it's very frustrating and confusing for the consumer. So, my advice, my advice would be to call it just build for rental living if you're doing it on our platform. The known term inside the sector is build to rent, but that doesn't mean that you can't, when you're doing your resident experience or that viewing, explain explain that this is a co-living building within the BTR sector, or this is a single-family housing community within the build-to-rent sector. And that's really where we can start maturing our own market in the UK.

SPEAKER_03 13:17

It's interesting because if we look at hospitality, it's a bit like saying it's a hotel or it's a self-catering accommodation. It's that umbrella term, but within hotels, you'll have big brands, you might have apart hotels, you might have uh BBs, different ones within there, but that umbrella term tells a consumer what to expect. There's a there's a certain level of service experience product that you'll get if you go for a hotel, whereas it would be different if you go for a short-term rental or or um self-catering accommodation. It's like it's those umbrella terms, isn't it, that to help consumers understand what it is that they're that they're looking at or or even looking for as well.

SPEAKER_01 14:04

And I think I think also, you know, by doing things like this, these podcasts, uh it kind of helps unify the industry by getting that kind of information out and saying, hey, by doing this, by unifying this terminology, it's gonna be better for us as an industry, but also better for us uh um for our residents. Uh uh, you know, before we uh start a recording today, Mitch, we were talking a bit about technology. And I want to kind of shift our conversation that way. Um, you know, as this technology becomes more of a norm and expected and integrated into built-to-rent operations, you know, where's that balance? Where's that balance between, you know, using things like AI and all these different technologies and then also the on-site and what services, you know, residents expect when they come into the building, whether it's concierge, things like this?

SPEAKER_00 14:54

I think if we go back to the expectations of a renter that uh has experienced build-to-rent or is moving into a build-to-rent development, their expectations are that they can communicate with the on-site staff within some sort of app technology that there's an ease of moving in. So 90% of the development is fully furnished, and there is that higher level or higher service level expectation, um, which not all humans can do, unfortunately. We lie to think that there is an irreplaceable human element, which is um that I see a built-to-rent development online, I call them up, and I go through to a human and I speak to a human. If we lose the resident journey, it becomes very robotic. And you may, as a consumer, feel like a number that, right, I'm just a number, I'm renting one of those apartments in 200 apartments, and then you start to lose that sense of community, and that renter will then leave in 12 months because they won't feel part of the community, they will then go back to the historic version, which is I live in a block of rental apartments. So you should be looking at technology as a way of an enhancement, um, and actually, how does that enhance my site staff? Everybody wants to minimize the number of site staff to improve operational efficiencies, operational um expendure, expendure cost is are are always rising, unfortunately. That is the the honest truth. But if you strip back the the bare basics of right, you've got on-site staff, you've got um somebody that does the maintenance, um, you've got somebody that does the leasing, you've got a leasing manager as well that sort of covers, uh, you've got a general manager, you've got all of those site staff in place. What uh what what technology can help is is the sort of the legalities and the the tenancy agreements and and that side of it. I want to, if I was a renter now, I want to be able to go on an app, sign a tenancy online, maybe sign with my finger or my iPhone, and then be able to have all of my sort of tenant you know details there. I've got my tenancy agreement, I can then see the the inventory before uh when I before I've moved in. I can then see exactly you know how the you know the Wi-Fi is because Wi-Fi is now included within the rent. Um, I want to be able to control pretty much everything from my phone, and now you can even access your apartment from your phone. You there's no need for things like a key where naturally keys break, you know. Um, so we're seeing the built-in market evolve, but I think that there's a danger that AI takes over everything and runs your building for you. But if we get to that stage, we will lose a sense of community. So there it's always that balancing act, and we as experts in the industry have to find that balancing act, that balancing sort of aspect as to how does how does this technology enhance the team? So if we look at the resident journey, you have all of your inquiries that come in. Not everybody's going to rent, some people will, some people won't, but the technology side should be documenting what type of rent are inquired, where they inquired from, what demographics, and that should keep it sort of almost a lock so that when you come to phase two or you come to the second lease up, you know that on lease up one you had uh an age demographic between 30 and 35 that was most popular. They were all originating from these, you know, these geographies or these pockets of the city, essentially, if it's inside the city, and that way you can then understand your demographic that's living in the building to be able to host on-site resident events to include everybody that's living there, and actually create that sort of cohesive community that then doesn't want to move out because every building owner, whether it's a pension fund or an institutional investor, doesn't want their renters to leave. They want to have the minimal churn, but not everybody's willing to do the uh the other work, the community work to get to that lowest churn rate. So it's really about a balancing act and finding ways to enhance your your site staff and to improve your operational efficiencies.

SPEAKER_03 19:43

It's really interesting what you what you're saying there, because we're hearing all about AI agents at the moment, you know, and but if we're in danger of using AI for that customer journey, which is considered when someone is looking for a place to rent. It's not like, let's say, one night at a business hotel that you're going to for a conference or something where perhaps something quite transactional, like an AI agent, would work for that customer journey. But when it is a considered, it's where you might live for the next one, two, five years. Having those that that human bit in the customer touch points, even in the consideration phase, is so important so that so that those residents don't feel like a commodity. So no matter how good the AI agents get at being correct and giving um information that is, you know, is personalized and is correct and is, you know, suit works and all of that stuff, what you do miss of there is that sort of relational thing that that you that is so important to begin the journey. Because, you know, as we know, consumers begin their journey whilst they're in consideration stage. It's not just the minute they sign the lease or buy the product, it's in that how do I feel about this brand as I'm having all these different touch points with them. So it's a real I mean, we're in such an interesting world right now, um seeing how everything is changing on so many levels, but but that one particularly and how that will impact the customer journey.

SPEAKER_00 21:25

Yeah, I I think as well, if you if you look at the sort of the human aspect, technology isn't going to be empathetic. Technology isn't gonna understand that renting can be quite a stressful process, moving from one property to another, especially if you're an international renter, um, or you've never experienced you know something happening that could be a disaster, like getting locked out your flat or something like that at you know, the middle hours of the morning, or you'll come back from a flight and yeah, you've you've lost your key card or you've lost your FOB to get into the building. And If there's no human element that can be controlled in those situations, then having AI would really, really help to give the renter some options at least so they're not trying to find different phone numbers to contact somebody. But if it's during you know the working hours, then there should be the human reaching out to that person first, and the human sort of controlling those aspects, and then sort of AI and technology backing that up and sort of understanding, you know, what's necessary to make it the renter feel like a resident, essentially.

SPEAKER_01 22:37

Yeah, it's got to have a uh again, you know, going back to the original part of the question is striking that balance between you know the digital form and as well as the human form. Um I I wanted to uh talk a bit about um you know the the future renters, uh I guess you can say we we had a conversation with the previous guests talking about student accommodation and how they should all live in you know terrible conditions because the rest of us have, but that has changed uh quite a bit uh since I went to university. Um and you know, you have these younger generations uh in the student accommodations kind of really reflecting what they want and what they need. Um and so this sector has influenced a lot of aspects of build-to-rent, you know, whether it is the amenities or the digital style and the community building, you know, what key lessons can build-to-rent operators take from the purpose-built student accommodation, you know, to better serve these modern renters?

SPEAKER_00 23:30

I think if we look at the PBSA sexa, um over recent years it's become a more and more challenging asset class, mainly because of co-living evolving and being that sort of studio-led development that is a higher standard compared to PBSA. So, and PBSA sort of developers, owner, operators are frustrated because there's much more flexibility in what you can do with a co-living development compared to a PBSA development. If we go back to uh 2016 when I was at the University of Rohampton, I chose to stay in halls of residence for three years, but it wasn't fantastic quality. Every every I guess room looked exactly the same. There's a blue carpet, it's a yellow wall, and it's it's got the you know the bare minimum. You've got your your wardrobe, your your single bed, um, your bathroom if you're lucky enough, if you've got uh the studio with, well, a room with a bathroom, and then you've got a shared kitchen, which you know looks like everything was bought from IKEA. Um, unfortunately, there are a lot of BBSA developments that are still looking like that. Um and it needs to change, and I think the student market is struggling because of co-living specifically, because it's a different standard of living, and you're now sort of benchmarking pricing of student accommodation in comparison to co-living, and there is no that there it's just not comparable, comparable essentially. Um, where we can learn though, just to bring you back to your point, is that the student accommodation process is much, much more stressful for a student that's potentially lived on their own for a long period of time, um or is going to live on their own for a long period of time, um, has no sort of foundation, so no community, it's much harder to build relationships because they've probably lived with their family for some time, and actually it's a much more stressful environment for them. So there's much more sort of hand holding required for that student. Whereas in BTR and sort of the co-living and the multifamily developments that we have here, it's much easier because the age demographic is much more matured. So naturally, you're gonna have people using the workspace or the sat there, you know, in the co co-working space, in the meeting rooms, um, in the gyms and things like that, and they're naturally gonna bump into each other. I actually travel every day past the PBSA development um in central London, um, and the gym is just never used in the morning. And I think what could that PBSA operator do to be pushing sort of community more? Because community can come in all shapes and sizes. It could be that you hold gym classes and invite your residents that way, it could be that you have wellness, which is obviously very important in BTR now, um, wellness exercises or wellness uh like yoga, that something to get the rent is included. Um, but unfortunately, PBSA don't sort of have those unique spaces like BTR does. So I think if we learn, uh just going back to the resident journey, like we said with Jessica, that resident journey is just so so important to be able to make that renter to a resident, and that's a really, really important journey from a student perspective, it's much harder because obviously you're doing it on a term-by-term basis, so you're potentially doing a 53-week tenancy or 52-week tenancy, um, or potentially much shorter, depending on how those tenancies are operated. So, what we can learn is that if we put the the resident first and make them feel at home, then they're gonna stay for much longer, the churn is gonna be less. You can then let them host their own on-site events and and get the residents to to sort of lead that community for you, which would be the best case and scenario. So there's many, many lessons, but the main one for me is the importance of that resident journey and having that human element lead the the resident journey will start building the foundations of a community.

SPEAKER_03 28:03

It is interesting because my my son is 18, he's he's in his first year at university, the Cardiff University. So I'm having this, you know, I'm having a second life, if you like, of student accommodation, and it is very different. He's in very basic accommodation, but he does have his own bathroom, which you know was never anything that we'd share with, like, I don't know, 20 people or something. But I I think an 18-year-old who's going into student accommodation. Now I know that the money is not in the UK 18-year-olds like my son and my wallet, it is in the overseas students coming into you know, the into London. But it is a different consumer. You know, my my son's not interested, A wouldn't be interested, I'm pretty sure. Uh, he does listen to this podcast, so he will tell me, but he's not interested in yoga at eight in the morning or or those things. Like they do what typical students do, which I think we all know what typical kind of students do. So it's just the needs is very different as well. Um, and I guess that impacts how PBSA runs and the different levels, you know, there's like and and the different purses that that are kind of there than compared to the build to rent. Um, but I know that the accommodation all has WhatsApp groups and you know, the different flats get together and all that kind of thing, but maybe that is just more because it's student life rather than the the building that they're actually in and how that works.

SPEAKER_00 29:37

I think, yeah, just going back to that is the importance of the spaces for PBSA. Um, and that's comes back to sort of knowing your your your residence, which um if you're not documented documenting that process via technology, then you won't necessarily understand that demographic that's living there. So I think if if we go back to where technology can help, it's uh understanding you know that renter or what they what they like, what they don't like. Um, and it doesn't have to be like a questionnaire, or it could be if you sort of give them some sort of you know voucher or something like that on that that resident process for the students, say that they can you know get a John Lewis voucher if they complete this questionnaire, which or a shopping voucher, which would entice them to then sort of tell them more. So what do you like, what you don't like, what would you you know need on site? Would you, you know, would you benefit from support groups, whether it's study groups or knowing who else is on your course in there? And the same goes for BTR, but in a much more matured way. So what yeah, what on-site events would you would benefit you most essentially? Um so yeah, it's just understanding your renters and tailoring it around them rather than pushing the narrative, like you said, Jessica, about pushing the fact that they should be doing a yoga class when they're hung over it in the middle hours of the morning.

SPEAKER_02 31:06

So I didn't say that, I just implied that.

SPEAKER_00 31:11

I know I've been there, so yeah, but I think it's it comes back to understanding your renter and all or understanding your student, and that is where technology can help us along the way to be able to tailor that bespoke approach to whoever's living on site, whether it's um an international renter or uh an international student or um somebody who you know isn't familiar with the the built-to-rent term or single-family housing. So it's all about understanding your renter, and I think we still have a way to go of of finding that solution. Um, but technology can certainly play a big part in understanding the renter from a from a data point perspective.

SPEAKER_03 31:55

I before Christian brings us into another topic, I just have a question. You may not know the answer, but and maybe you know it through on the move. But what what is the average tenancy of a of a build-to-rent resident? Like months, years, like do you happen to know that?

SPEAKER_00 32:14

I would love to take a stab in the dark, but I would know more about the sort of affordability side than I would about the tenancy. I would like to think that most um most renters would would stay sort of at least 18 to 24 months. However, obviously we have the the rent reform bill potentially coming in, so that churn may be affected either by the operator moving in or moving interchanging renters. Um, but I'd like to think it was 18 to 24 months. I think the reality now is that it's probably closer to the 12-month mark. Um, but again, that's where the resident experience comes in the most. And we have some excellent platforms uh within the BTR sector that review that journey and then go further to review how that renter is currently experiencing the development and giving you that organic feedback to be able to improve your operational efficiencies or that property management or the maintenance side. Um it really, you know, we would like to think that people are staying longer, and I think that's where it sort of opens avenues for international investment um coming into the UK where there's an option to potentially increase the rents because that that churn is minimalised. So I don't think there's a wrong or right answer, um, especially when we have these new forms of sort of newer forms of co-living where it's a blend of um either a sweet generous um planning application where you can only do up to six month tenancies, um, or that sort of bespoke model of blending um the hotel with co-living and you have three month, six-month, even one week or one day potentially stays. So it's a it's a real hard one to quantify. What I would say though is that our parent company, CoStar Group, um, being taken over uh last year, this time last year, um they are documenting that at the moment and they're looking at different ways, so the credit checks and and actually seeing how much a renter is is paying at the moment to live in that type of apartment, in builder rent specifically, um, what the concession rents were, so whether there are any discounts upon moving in, um, and potentially what the yeah, what the churn is as well. So we could then start to work out exactly that question as how long um the life cycle is of that renter. But it all comes down, yeah, it all comes back to creating that community, and you know, there are some amazing operators that have got some really or built some really good foundations to be able to minimize that churn and to keep the the renter renewing every single year. Um, but I would imagine right now it's 12 months if it's a large-scale multifamily or built-to-rent development.

SPEAKER_01 35:14

Yeah, it would be interesting uh when they do the research. The parent company does the research and uh we can get our hands on it and see what that information is because it would be interesting to even focus just a whole podcast episode on that uh in itself. Uh because I'm sure that we could learn a lot, and then I'm sure the the rest of the industry could learn a lot from that research. Um, I wanted to talk about uh a bit uh as you kind of alluded to it earlier and you know gave us a little bit of the the answer to this next question, but uh as we know that uh our residents' expectations evolve, change. Um so uh I'm wondering what you've seen in the industry. What are the biggest shifts that you've seen that that tenants prioritize? Um and you know, are they just some trends that BTR, you know, for example, co-working, these co-working spaces that are popping up everywhere? Is that something that BTR, you know, operators and and owners should look into having in their spaces, or is it like a passing trend? What are those things that you see that's going to be sticking around for a while? Uh, and how can these operators, you know, stay ahead of these trends?

SPEAKER_00 36:22

I think if we go back to who actually owns the building, whether it's an institutional fund or pension fund or it's uh another sort of uh asset owner, investors don't like to invest in trends because they are a movement or you know, if they have a passing by moment that you know, a cinema room, for example, um or podcast room, which we've heard quite a bit about from various operators. Yeah, but a podcast room, a games room. Um, I've seen one development with a golf simulator, uh, which is in Manchester, really cool, amazing development. Um, so many different types of amenities, but actually, I think most people now are looking at sort of stripping it back, if I'm honest, because all of these amenity spaces come with that cost. So I think if we're seeing any sort of shifts or trends, is that people want to build spaces that are multifunctional. And what I mean by that is that you haven't got a you've got a games room with a pool table in the middle that you cannot move. So that the purpose of that room is simply just a games room. Whereas if you have a private dining space with a table, that could also be a meeting room, or you have a uh potentially like a podcast room, um, which could be changed into a recording studio or something else. Interestingly, I think the focus for the the residents now is more sort of shifted towards the security, having bike storage, um having uh you know that co-working space, like you said, uh Christian, that that place where they can work that isn't their room, essentially, where they can meet other individuals that are potentially self-employed or don't need to be working in the office. So it's really about knowing and and doing that sort of placemaking work before you start to to sort of set that space as to what it is and identifying what the need is. So if you've got 10 gyms in the local mile, then there's no point putting a gym in that development. Um, however, if your development uh hasn't got a gym and the only accessible gym is via a hotel gym, then yes, there definitely is a need for the gym. But it's it's that sort of research that's really critical at the start to be able to make sure that those rooms are going to be used. No operator or investor wants to think that any potential resident coming in for a viewing would go into those amenities and it not be used. That would be the worst possible scenario unless it's you know midday and everybody's at work. What they need to do is obviously make sure that there's that sort of inclusion piece where it's a multifunctional room that can be used as a gym, a studio for events, whether it's yoga, whether it's a dance event, um, whether it's you know a Zumba class or something that's multifunctional, but it does have weights in it, so you can use that as a gym if you want to. Um where there obviously there's larger sort of spaces um identified as places like saunas and swimming pools, that comes at a really, really big cost. So who's gonna take the hit on those cars? It's gonna be the renter and the resident. So then you're having to make the the numbers stack up essentially because you've decided to put a sauna and a swimming pool in there, which means the rent the res residents probably have to pay at least you know £500 to a thousand pounds more on their rent because you know somebody's got to cover that cost. Um operators like to think that you know they will have three amenities in each development and then the rest are apartments, some you know do more than that because the rooms are studios like co-living, for example, so they need more amenities because the rooms are smaller than your standard studio in a normal you know conversion house or or a normal development. So it depends on what the asset class is. But the best advice I would give to anyone is understand your target audience and your demographic first before you start sort of identifying that space to be a gym or that place to be uh a podcast room or a games room. Because if your demographic is between sort of 30 and 40, possibly not the best choice to have a games room. Probably probably some meeting rooms or meeting spaces, some um phone booths and things things like that. It's it's it's really about understanding who's gonna be your the end user, who who's gonna be the consumer in that development.

SPEAKER_03 41:27

I think also with things like saunas, swimming pools, games rooms, they go wrong, don't they? They sort of break down, and then you've got the issue of them not working for a bit. Say the saunas, you know, I go to a gym and the sauna seems to always be a bit broken down, and then you complain. You know, it's like that expectation that this amenity that I've bought into is going to be available to me 24 hours whenever I feel like using it, but it happens to be, you know, not working for whatever reason. I think you can get quite a lot of, and certainly one of the guests that we've had on the podcast talked about that. You know, not only is it the expense that then has to get passed on to the consumer, to the resident, but it's also the fact that they're not always that reliable and they do need maintenance and care and can go wrong, which causes unhappy residents who then give bad reviews and all of that. Um, Mitch, I mean, you've got so much experience in the build-to-rent sector, but I would also like a lot of you have a lot of experience of the resident side about what they're looking for and what they want. And as things, as the sector kind of becomes increasingly competitive, what do you think the operators can do to differentiate themselves so that they are really appealing to not just today's resident but tomorrow's, you know, next year's, because it the consumer's always changing as well, what they're looking for.

SPEAKER_00 42:59

I think it goes back to having a really good brand, essentially. Um, the perception of built-a rent is still that it's expensive. Um, and why should I be paying that much for that type of apartment when the local market is charging 30, 40, 50% less than what the built-rent operator. So, from a face value, especially on all the portals as our own, is that potentially that some of those developments uh are understood by the local demographic as being more expensive. What we need to what we need to do is uh as an operator, like I said, going back to the start of the conversation actually, it is leave them naturally because of the benefits, or look at different strategies to advertise that development where the renters are living. So it comes back to that sort of data point where we we look at trends of where the renters are actually residing to where. Actually, where they want to live. And that can always change. Those trends change on a monthly basis. We have a tool which does it on a sort of a heat map, essentially, and it shows you right, we've received these email leads since this date, and the heat map is going to pop up and show you exactly where your potential target audience is. Built a rent now isn't always in a city location or in a sort of a mainstream, one of the big six cities, because there are you know investment opportunities in in places like Leicester, Liverpool, on the outskirts of Manchester, Old Trafford is set to be regenerated in that area. So it's it's one of those things where we have to keep on all singing from the same hymn sheet is that right, we're going to promote the benefits, right? You're getting all of this included within your rent. Now, if it is a gym, swimming pool, sauna, you might be catering to a certain demographic, which may be international. And if that is your target, then if you're prepared to sort of have a high turnover of renters every single year, then that's fine. But if you're focusing for longevity, then you have to build developments that are going to cater to your target audience, um, and that are going to be sort of quantified within the price. That yeah, there isn't a gym within you know two, three miles. So actually, yeah, it does make sense to put a gym in there, and really that is really easy to sort of maintain and keep clean. Um, as long as you keep those standards as a brand and and you keep that sort of that same algorithm as you go by depth development development, then the brand message will be understood. You know, they'll understand exactly what it means to live in that type of development, um, and then they'll start to feel as part of a community. Um, brand visual is great, but the branding, brand language, and and branding message to your consumers is far more important because then they'll actually understand the brand and you know understand exactly how to move forward and and and how to to rent with that particular operator. It's a very, very um competitive market now in the BTR sector. There are a lot of operators, a lot of fantastic operators, um, and a lot of smaller operators, but the ones that are growing substantially are the ones where the brand is understood from all of the different metrics, whether it's the vocally, whether it's verbally, um to the renters, or whether it's the actual logo. Some people brand as the community or the neighborhood. So again, going back to to Wembley Park and East Village, um those are big neighborhoods where they've branded it as the neighborhood, some brand as the individual community, and some people brand as their own brand. It really depends on you know what they see is best fit for that location. So it really comes down to are you on is your brand for the area? Does it have a significant appeal if you're looking at sort of international traffic? Is it that that brand is best fit for the develop per brand essentially, because you don't have things like immunity, so it's more catered towards the private rental sector, or is it a you know a niche development in a location that isn't familiar with built-rent, where you need to build it as its own individual community to be understood? So there are many aspects, but having a good brand um and a and a good operational team to support you with that brand will just mean that it will elevate uh for the future, and that will allow you to create sort of joint investment opportunities with as many, many clients as you can, essentially.

SPEAKER_01 48:09

Oh, that's great. And I think this is this is a good place to end today's conversation. Um, is you know, building that brand and how to look at that brand. Um, you know, Mitch, uh I I guess we got one more question for you. Anything that we should be looking out for, any uh upcoming events or uh news that uh you'd like to share with our audience today?

SPEAKER_00 48:27

Absolutely. So on the market, um, as may you may or may not know, was brought by CoStar Group uh December 23 now. Um in the January last year, we're all invited out to America for the launch of homes.com in the US, which is taking the market by storm because it's a uh a membership style uh portal rather than paying a third of your commission in the US. So it's taking the market by storm in the US and will soon launch in Europe, across the UK, Spain, Germany, and France. Um we're not quite sure whether it's going to be launching Q4 or Q1 this year, um, but the idea is that we will blend and there'll be another portal in the UK that will be uh fair and sustainable for all B2B as well as the B2C as well. So we are on a huge growth strategy to become connected with the American platform um and to get that American exposure, and this will only benefit the BTR market because having that international exposure is is key for any sort of operational team or investor to be able to attract people potentially paying higher rents. So yeah, there's a huge growth journey in place for on the market moving forward, um, but it is still to come and it's very exciting. Um but hopefully it will come Q4 this year, potentially Q1 next year, but there is then going to be that inter sort of connectivity with Europe and America, which will hopefully sort of bolster our traffic.

SPEAKER_03 50:13

That's great. So does that mean it'll be one platform, homes, will it be homes across all the markets?

SPEAKER_00 50:20

Yeah, so they they started with their first platform in America, which was just rental and multifamily or built to rent, um, which was uh apartments.com. Um, and the idea was that if you're searching for an apartment in the US, that you're probably searching for somebody somewhere to rent, and that was why it was just rental. That is now number one. So then they learned from the journey to get that to number one and documented those metrics. They then did the same last year with homes, um, with this becoming sales and letting, so integrating all of the letting stock from apartments.com. Um, and yes, the the idea is that we will be or become homes, we'll start blending out on the market, we'll start blending in homes, um, duplicating the uh the listings. Um, and then we've got this uh amazing path to look forward to where we will be working much closer with the other companies within the CoStar Group um pairing companies. So, yeah, it's is it's exciting being owned by a 33 billion pound company with 33 companies that are all focusing on one thing, which is to digitalise the real estate market. Um, and yeah, hopefully it will uh launch towards the end of this year.

SPEAKER_03 51:36

Brilliant, thank you, Mitch, and a very different world from ballroom dancing, isn't it? So uh yeah, thank you so much for coming on the show. It's been great speaking with you, and you've got you know, you're a wealth of knowledge around the build to rent section. We look forward to seeing the platform develop um as the year progresses. So thank you so much.

SPEAKER_00 51:58

Thank you, buddy. Thank you both for having me.

SPEAKER_01 52:00

And that wraps it up for us today. So thank you guys so much for joining us on this episode of Pillow Talk Sessions. To stay connected and catch every new episode, do us a favor and head over to Pillotalksessions.com to subscribe. And be sure to follow us on LinkedIn for more insights and interviews with leaders who are shaping the future of hospitality, multifamily living, and community driven spaces. Thanks again for tuning in, and we'll see you next time on Pillow Talk Sessions.