This Is A War: The Battle For Amenities In Birmingham PRS
The first shots have been exchanged in what will soon be a fierce war between Birmingham’s PRS sector developers. Whether it is chiller rooms to store residents’ online groceries or hotel-style food and laundry offers, landlords are tooling up with attractive amenities.
Those landlords who fail to come up with the right amenity can expect to go down.
Ahead of the Future of Beds in Birmingham event on 20 September, Bisnow checked out the amenity arsenal. Have landlords and developers got what it takes to win? Or are many about to be out-gunned?
A surge in the supply of private rented sector apartments in Birmingham is going to mean a new — and fierce — battle for tenants, and the weapon of choice will be amenities.
So says SevenCapital Director Andy Foote, as he celebrates 80% pre-sales at the 238-unit St Martin’s Place PRS scheme at Broad Street, Birmingham, and prepares for the launch next year of the 780-unit Connaught Square scheme in Digbeth.
Foote is convinced that as the supply of PRS units grows, so competition for tenants will become more acute. Landlords and developers with the right amenity offer will win out over their less agile rivals, he said.
“We’ve got 20,000 new apartments coming in Birmingham city centre, we need another 10,000 in the next four or five years, and in a market like that tenants will have choice. If you don’t offer them the right amenities you’ll miss out,” Foote said.
“The amenity issue is going to be driven by tenants — by the millennials who want somewhere to store the organic food they ordered online, they want a gym, they want to walk to work, they want the services and entertainment, and developers and landlords have to give that to them. Those who provide it will be popular, and the others won’t.”
Not All Amenities Are Cost-Effective
So in the battle for tenants, which amenities will count?
“The standard offer we all know — gyms, that kind of thing — but we’re going to see new amenities come into play. That will mean entertainment rooms, meeting spaces, cold rooms to take online grocery deliveries whilst you’re out, facilities for families like playrooms, maybe,” Foote said.
The trick will be to find amenities that are persuasive for tenants, but do not push service costs and rents above affordable levels.
“If it’s too expensive, rents will go up, and then you lose your competitive advantage. The kind of thing we’re looking for are the Wifi, the spaces for people to link up, the security and smart locking systems which do not mean large upfront costs,” Foote said.
“The kind of services a hotel can provide — as at St Martin’s Place — are very much what some tenants want, but remember you can already order meals to your room from Deliveroo, and there are similar laundry and cleaning services available. The argument for the landlord laying this on is that the landlord may be able to use their weight to get a better deal, and that by using a landlord-provided app or service you feel part of something bigger. And of course there is no upfront cost for the landlord.”
The Hotel Model Of Luxury
Earlier this summer SevenCapital launched what it called the city’s first and only luxury hotel-serviced living residences, offering a lifestyle option previously only seen in prime central London.
The St Martin’s scheme will benefit from full use of hotel services provided by the neighbouring Park Regis Hotel.
On-site amenities for St Martin’s Place will include a private gym, WiFi lounge and cinema, with a courtyard garden sitting at podium level in the centre of the development, providing outside space, a real luxury in the city.
“Whilst Birmingham’s housing market remains affordable in comparison to other regions, particularly in the South, we’re able to offer this next level of luxury with an extremely competitive price tag, which is a very exciting prospect,” Foote said.
Other landlords are watching and waiting: the PRS market is still in its infancy, and the more specialised, institutionally owned build-to-rent sector is yet to see its first completed development in Birmingham.
Serious operators like M&G Real Estate said they would love to be represented in the city but have yet to find a location at a price that works for them. When that time comes, those with the most worked-out amenity offer will be in pole position to capture and retain market share, Foote said.
“In the Birmingham PRS sector we are all trying to please the tenant, and amenity will be the watch word," he said. "It is not the only thing that will matter — location obviously counts — but as service levels rose the baseline offer will rise, and those landlords who can offer the best deal will be the most popular.”
Join the conversation at the Future of Beds in Birmingham event 20 September.