THE ELEPHANTS IN THE BUILD TO RENT ROOM
How does efficiency help make a scheme viable? (part 2)
An efficient operation
4 insights in 3 minutes
In terms of gross to net ratios overall what do you think people can aspire to? What sort of percentage?
On an operational efficiency I'd say that the market is still has its sights on this on the mythical 25% and if you can get anywhere near that then you're doing a good job. I think part of what's going happen is that everyone's going start out a little bit higher and then see where they can do better, and that's going to come from a combination of expense control and revenue growth.
From your experience, what's your view on customer service the service?
In this industry it’s actually the product, and so everything that you can do to make the product improve the service improves your true gross to net, your gross to net operating efficiency. So anything that you can do that delivers a superior customer experience the market will reward you with rent and anything you can do to help reduce operating expenses, you know, you will be rewarded with extra income and a higher valuation. So it starts to feedback on itself. You lose a little rentable area, but you deliver a better experience. You're possibly getting, or in all likelihood getting, the same rent than you would have if you had a little more area, but a better customer experience.
Turning to a different element, the on-site teams that you're building up. What's the importance of the on-site team?
In Build to Rent the importance goes back to service. It goes back to the expectation that that people have with increasingly everything in their lives. That they demand instant service and sort of instant attention to their needs. What are you doing is to really help people feel that they've got their own spaces within the building. We've encouraged people to use the social spaces, use the amenities spaces. And we've given them a bit of a demonstration by hosting events that we put on for our residents, like pumpkin carving and a Master Chef losers dinner for the for the foodies in the building. And off the back of that we've had several residents realise that they can hire the space for their own dinner parties and children's birthday parties and all variety of different activities. People will start to feel like it's an extension of their own apartment, like it’s another livingroom.
There’s another elephant in the Build to Rent room!
Michael Allen, Managing Director at Tipi, shares his opinion on how operational efficiency can help make a Build to Rent scheme viable.
Market insights include: