Mid (adj): Modern slang, to be mediocre or average; of middling height. 

The growth of build-to-rent in London and the UK has largely been a high-rise story, as developers look to build sites densely to increase their margins. But rising costs and regulatory delays for taller buildings have made such schemes less profitable.

That has led the world’s largest rented residential company to pivot its development strategy.

"We are very much moving away from what we're known for,” Greystar Managing Director of UK Development Thomasin Renshaw told the audience at Bisnow’s Build-To-Rent Annual Conference, held at Canary Wharf Group’s 40 Bank Street.

“The vast majority of it has been high-rise, and what we're looking at now is predominantly mid-rise. That is not necessarily because we have turned our back on that, but it’s just based on viability.”

Earlier this month, Greystar announced that it had raised €2.7B (£2.3B) for its second European rented residential fund, which combined with debt will give it about €6.8B (£5.9B) to invest in the sector across the UK and the continent.

That fund has already pivoted more toward investment in existing assets compared to its predecessor, which focused on development. Last week, Greystar announced that it had completed the purchase of a 904-apartment BTR portfolio in Elephant & Castle, south of central London, from CPPIB and Lendlease for about £500M.

Investing in existing BTR assets is attractive right now because of the prospect of buying below replacement cost while low amounts of new supply mean rents are likely to rise in the coming years.

But when Greystar is building in the UK, it is moving out of city centres and toward shorter buildings, Renshaw said.

“We’re focusing primarily on the Oxford-Cambridge corridor, the M4 corridor, the Home Counties and high-employment conurbations,” she said.

Sizewise, the magic number is six. If buildings are six storeys or fewer, and below 18 metres tall, they don’t have to submit to the approval process of the Building Safety Regulator.

For the past two years, the BSR has taken more than three times as long on average for design safety approvals than the 13-week decision time promised developers. That has created costly delays and discouraged investors from putting money into new developments.

Being able to skip the BSR process gives greater certainty, Renshaw said. And in a world of high construction costs, mid-rise is also more appealing than more complex high-rise assets.

“Somebody referred earlier to building something at seven stories, and I thought, why would you build at seven?” Renshaw asked.

Renshaw said the chilling effect on buildings between seven and 15 storeys is a problem in a country that needs to build tall, dense buildings as part of the mix of strategies to hit housing targets.

The challenges making new development unviable are pushing other major UK BTR players to change tack as well.

Quintain, which owns and manages the 6,000-unit Wembley Park development in north London, is pivoting two office sites for which it has planning permission, one to student accommodation and one to coliving, CEO James Riddell told the event.

The company is in talks to secure grant funding from bodies like the Greater London Authority, Homes England and the National Housing Bank to make possible the remaining 2,700 BTR units planned on the site.

It is also looking to optimise its operating efficiency to increase profitability of its assets, which will make it more viable to build out those units. A big part of that efficiency will come from technology.

“I think there's a bit of an arms race around that tech piece, but I don't think it's fully understood yet,” Riddell said.