In Elephant and Castle, a small neighbourhood of rival build-to-rent towers are jostling for resident attention.
To the south, Uncle’s 46-storey yellow skyscraper, designed by the late Richard Rogers, is the tallest BTR scheme in London. Around the train station, Get Living has flattened the old shopping centre and is building the second phase of its 1,400-home Elephant Central scheme.
The latest addition to the skyline comes from one of the largest and most controversial regenerations, as Living by Lendlease unveils its first BTR homes at the regeneration of the 1970s Heygate Estate.
After almost a decade at the £2.3bn Elephant Park regeneration, Lendlease launched Park Central West last summer, just as the country was coming out of lockdown. The building has been designed as an art deco throwback to the 1920s, with rooms inspired by Virginia Woolf and Coco Chanel. Every detail has been thought out, down to the branded scent wafting through the corridors.
“Smell is the most powerful sense, it’s so evocative,” says Stephanie Barbabosa, head of BTR at Lendlease, as we walk through the games room, co-working space and cinema on the first floor. This smell aims to create a feeling of familiarity and home for residents of the luxury rental flats.
Living by Lendlease targets the top of the market, with monthly rents of £2,188 advertised for a one-bedroom flat, reflecting the larger amenity provision and those extras. While this is sightly more than rent at Get Living, it still doesn’t stop the competition. Lendlease’s gym fronts Get Living’s building with a large poster advertising the latest deals, and Barbabosa admits “people will probably go back and forth”.
Of course, everybody has snooped around each other’s schemes. “It’s good fun and it’s good to get out and see how people develop their product,” says Barbabosa. “We’ve also developed good relationships.”
When lettings slow down or speed up, operators share data. And as the market continues to boom, Barbabosa hopes to see more of that spurring new opportunities for benchmarks, training, and a range of vendors and people.
Importing talent
Barbabosa started her career in Los Angeles. Even in California, it’s a small world: she worked with Greg Spezzano, who went on to manage Lone Star’s Wembley BTR investments at Hudson Advisors; Danielle Bayless, who recently joined him as COO of Quintain Living; and Invesco’s Stephanie Smith. The group worked together at Alliance Residential, part of Trammell Crow – “kind of the OG of the multi-family sector in the states”.
After a spell in Washington DC and the East Coast, Barbabosa moved to Lendlease in 2017 to build the Living by Lendlease business and her new network. She needed to learn the landscape, legislation and the different players in the sector. “The very first thing I focused on was learning the UK market,” she says. “It’s a brand new sector here, where the consumer doesn’t necessarily know exactly what is build-to-rent.”
At Elephant Park there will be 900 BTR flats out of some 3,000 homes on the 27-acre Zone 1 site. Those homes are funded by a £1.5bn joint venture with Canada Pension Plan Investment Board. The partnership, formed in 2018, sees the pair develop sites on a 50:50 basis, take an equal slice of the development profit, then transfer assets to a fund held 80/20 with CPPIB as majority shareholder.
Years of evaluating software, marketing tools and various vendor partnerships have culminated in a flurry of BTR homes coming to market. First, Park Central West, then within months the neighbouring Park Central East – both now around 50% let – with a third building next to that to launch before the end of the year. In March, Barbabosa will welcome her second-in-command, shipped in from the US, to manage Elephant Park, freeing her to expand the platform.
On the hunt
Barbabosa works in tandem with the development team, focusing on new investments and their geographical location within huge masterplans. “What’s the draw, what’s the customer journey? That’s the most important thing,” she says.
As she turns her attention to Silvertown Quays, Barbabosa is thinking about transport connections and customer experiences already. Meanwhile at Deptford Landings, Lendlease recently opted to sell a BTR scheme to Realstar and Quadreal, generating cash for future developments.
Lendlease has a pipeline of 25,000 homes, including the 11,500-home Thamesmead Waterfront project with Peabody and the 3,000-home Smithfield Market development in Birmingham. In February, Lendlease selected the design team for the first phase of the £1.9bn Birmingham project, though Barbabosa says it is still early days when it comes to selecting the tenure split.
“There will be BTR at every single scheme. What percentage depends on what we are trying to achieve,” she adds. “There’s a general thinking that BTR should be the first thing to come to market, because obviously rentals can go far quicker than for-sale product, and it helps to establish the place.”
At Elephant Park this wasn’t the strategy – purely because it was Lendlease’s first residential development in the UK and started long before the Australian giant entered UK BTR. The company also owns stock in the US and is about to launch a fund targeting Australian BTR. Together with CPPIB, Lendlease has also grown the BTR platform to mainland Europe, with construction already underway on phase one of the West Gate scheme at the Milano Innovation District, and Barbabosa aims to get on the ground and learn the nuances of that market soon, too.
Scale is important now. “Everyone’s on the hunt for buildings to buy,” she says, as she rattles through her to-do list. “Perhaps buying another platform [with] somebody interested in making an exit, figuring out how we get scale, like most of the other operators.”
This goes for Lendlease as a developer, the construction company, the joint venture and also Living by Lendlease, which she adds would also consider expanding to third party schemes.
So it seems the competition continues – but that’s not a bad thing. “All it’s going to do is push the sector to really take off,” adds Barbabosa. And with that comes diversity and a deeper network.
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