Tomas Jansons, Development Manager, Jansons Property
The world has changed. The way we shop, live, work and communicate have all fundamentally changed. For better or worse that is yet to be seen. These changes were already developing pre-Covid due to advancements in technology and our adoption of this into society, but there is no doubt that the pandemic accelerated this. In this article I will explore how the way we live is evolving which feeds into the way we work and live as our living and working environments become closely aligned. This in turn is changing the built environment landscape, causing the demise of certain property asset classes and seeing the rise of a new style of work/living environment. This has brought into limelight some new terms; BTR and Co-working which we will outline in this article in more detail and explain how they are now being utilised and combined.
Co-Working: the new way of working
Co-working is essentially a space where individuals and companies use a shared space to work. Rent is usually paid on a per desk basis, and everyone benefits from shared cost savings on things like utilities, receptionist, refreshments and equipment. Flexible working has seen a surge over the last five years due to changes in the way we live and society as a whole, including:
- Technology is now integral in our lives and working environment, it is now commonplace for meetings to take place virtually, talent-pools are widening as employers are not constricted by hiring based on location and company systems can be hosted in the cloud and accessed from anywhere
- There is more emphasis on multi-tasking rather than single focused projects which has led to an increase in hot-desking and break-out rooms to support the collaboration of teams across different departments
- Many industries now work on a 24/7 basis and a lot of the time this work can be done anywhere meaning that an office in the traditional sense is not required
- The workplace has become more about being active, social and creative rather than just a place to ‘work’ and this creates different requirements for different organisations dependent on their company culture, resulting in an office being more than just fixed desks and computers in the modern age
This is not just confined to individuals or small businesses either. According to a survey by Knight Frank2, 44% of senior executives at global companies that they surveyed said that flexible spaces will make up a fifth of their office space in the next few years. This survey was undertaken pre-covid so no doubt this desire for flexible working will have increased since.
The advantages of Build to Rent (BTR)
Build to Rent has been prevalent for a while in the real estate market but is not a term widely used or understood. Quite simply it is used to describe a purpose-built block designed purely to appeal to the residential rental market rather than private homeowners. BTR is an extremely successful and mature market throughout North America and Europe where it is universally accepted and there is less ‘pressure’ to buy your own home. BTR blocks are in direct response to demand for high specification buildings that meet every requirement of the tenant. They can include gyms, community rooms, theatres and relaxation rooms amongst a whole host of other user-friendly provisions.
In the UK, we are seeing a changing attitude towards renting with it becoming more accepted as a viable long term lifestyle option, rather than striving to buy your first home as quickly as possible. According to a Savills1 report the size of the sector will be 180,000 homes once all current projects are built out and this is still a very small portion of the total housing supply in the UK. At Jansons, we think the trend is moving more towards BTR living and this relatively small market is one to watch over the next decade. Living requirements are trending away from traditional house buying and shifting more towards:
- Convenience of location as these are typically in city centres
- Flexibility i.e. leasing with the ability to break
- Provision of on-site amenity e.g. gyms and co-working office spaces
- Opportunity to work easily from where you live
This results in many asking the question, why should we become a homeowner and enter the property ladder as quickly as possible? It would appear that traditionally this has been driven by ego but there are now many advantages of renting in a BTR block. The way we live is changing.
Co-working and BTR working together
At Jansons we believe that a new emerging sector is city centre BTR blocks with co-working facilities built in. This would essentially be a one stop shop for tenants, giving them the ability to lease office space within the same block they live. Or this could be a package deal whereby the rent for their accommodation and office is tied in together.
In conjunction with the excellent communal facilities these blocks tend to provide, these will be multi-purpose buildings for the tenant and one which will satisfy all of their needs. Location will be key for these developments i.e. city centres and close to a mainline train station to facilitate the ability to live and work from home in a well serviced environment which is also affordable. The tenant will also benefit from the ability to have excellent connectivity should they require to travel to the office.
It is clear that this shift was already gaining momentum however the pandemic has totally transformed people’s professional and personal lives by creating a new hybrid workforce with different needs. Whilst a proportion of society is itching to get back into their offices, the other is accustomed to a new and more flexible way of working that has proven to be successful and even beneficial for many industries. Therefore, the build environment must look to service both of these preferences that are shaping the future of work. BTR models are an excellent option to support the new way of working so we should expect to see this trend on the rise in 2021.