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Meet the man bringing US Build-to-Rent to this side of the pond

Build-to-rent developer, Quintain Living, is beginning to look and sound like a US-style multifamily operator. So what does it mean for UK furnished apartments?

24/05/2021 5 min read
WFH sheds, Canada Gardens

Words: David Thame

 

Lift or elevator? Pants or trousers? Tom-artoh or tom-aytoe? The United States and the UK truly are two countries divided by a common language. ‘Multifamily’ is the latest on a long list of words that have struggled to make it across the Atlantic.

The problem is that the equivalent UK expression, build-to-rent (BTR), is a very poor translation. It is too narrow, too exclusive, too…English.

At which point, James Saunders, Chief Executive of UK-based but US-owned BTR developer, Quintain Living, steps forward from dictionary corner.

Nobody has a clearer idea what multifamily means than James, and few people have a stronger sense of where it could go in the UK. With its Texan money and increasingly US leadership team, Quintain Living is shaping up to be the first serious US multifamily operation on this side of the pond.

It will mean more family-style accommodation.It will also mean a housebuilding business geared to operate at scale: Quintain is backed by Dallas-based investor, Lone Star, and, like most things from the state of Texas, they expect everything to be big.

‘We had significant US influence at the early design stage. Working with our US shareholder, Lone Star, has hugely benefited us by introducing influences from the US multifamily market,’ James says.

‘I wouldn’t say that what happened was Americanisation, but they brought with them an opportunity to change our strategy.’

For US-style multifamily development to work, developers need long-term capital. Unlike build-for-sale housebuilders, who can borrow, build, sell, take a profit and re-invest, in a fairly tight timescale, BTR developers cannot recycle capital in quite the same efficient way. True, selling completed blocks to investors can work. But the list of potential buyers is not long, and lot sizes are high, which tends to limit sale prospects.

If your strategy is more about long-term investment than building-and-trading, you need long-term money. This is where relatively patient capital, like that provided so far by Lone Star, comes in handy.

‘We were too dependent on recycling capital before Lone Star. Now they have provided us with the long-term capital we needed,’ James admits.

The American influence also extends to personnel. Quintain Living began hiring from New York’s multifamily talent pool as far back as 2016, but that process has now accelerated. Two senior figures from the United States are setting the tone. Danielle Bayless has joined as Chief Operating Officer after 25 years in the US multifamily scene, most of it on the West Coast.

‘Danielle has experience with communities of thousands of residents, she’s seen it all, including great experience maturing and developing management platforms like ours,’ says James.

“It’s great for us that we have Americans in key positions. It’s helped us learn quickly how to run our product in an efficient way, because over there it is a mature market,” says James.

So what to expect from this stateside influence?

Quintain are already operating an annual output of 600+ units, making it one of the UK’s largest BTR housebuilders.

Today, the 86-acre Wembley Park development in North West London has 2,400 units with another 4,000 still to come. Larger scale development sites (measured in thousands of units) are their target, says James. But only once Wembley is completed.

Second, expect some genuine multifamily development of the US kind.

In North America, ‘multifamily’ means exactly what it says: purpose-built (or converted) housing schemes, which provide homes for several families. In contrast, BTR tends to be multiple occupation by singles or singles sharing. Rarely, if ever, does an actual family with actual children wind up in a BTR block.

As part of the latest Canada Gardens phase at Wembley, Quintain will make a concerted effort to attract real family occupiers to schemes with a
bias towards three- and four-bed homes.

‘We are learning from the US multifamily sector, and applying it in a UK context.’

The result is now taking shape at Canada Gardens, where a family-oriented product offers a variety of child-sized extras.

The seven building Canada Gardens scheme has been designed with families in mind. There’s an acre of private gardens (separate from the rest of the scheme) for the kids to run around in. Co-designed with John Lewis & Partners and Samsung, on-site facilities include allotments and a greenhouse, work-from-home sheds on the roof, a pet park, a children’s play room and pirate ship, spaces for BBQ’s, a rooftop terrace with entertainment spaces, a library and a clubhouse.

In other words, plenty of distractions to help create the feeling that your young family is not trapped in its apartment.

Canada Gardens’ studios and one- to four-bedroom apartments are available furnished or unfurnished, with a ‘plug and play’ offering that allows residents to move in swiftly and painlessly – including WiFi set-up ready to go from moving day.  

‘We think we can grow the family side of the business,’ says James. ‘We don’t have a precise target figure in mind, and we know that the two- to three-bed flats could also be occupied by sharers and working-from-homers who want an extra room as a workspace. But we are aware of strong demand for family accommodation and we’re tapping into it at Canada Gardens.

“I guess our primary market will always be urban young professionals, but our instinct is that there are also more interesting target audiences out there, and the family market is one of them.’

The Quintain product has evolved. The first units were built-for-sale apartments, converted to build-to-rent purposes. The building was not ‘optimised for BTR’ James says, pointing to few lifts, few loading bays, insufficient back-of-house space and narrow corridors, among other things.

By 2018, Quintain was on its second generation of BTR product. More lifts, more loading bays and wider corridors were duly incorporated, and a refined leasing/operator structure put into place.

The third generation has been rolling out since last year and, according to James, lessons have been learned.

‘We learned that most of the demand is from within the UK – not necessarily British citizens, but British residents – and that is different from built-for-sale flats, which often have international buyers in mind. That means we designed for a UK market,’ he says.

Today, Quintain does not have a presence in the UK BTR sector outside London. But that could change in the medium-term.

James is happy to speculate about expanding his business to the UK regions. But he is not rushing into development: the relatively small regional markets might struggle to digest the high volume of new apartments Quintain is designed to produce. When the moment comes to expand to the regions, Quintain are likely to debut via management agreements signed with other developers. With so much still to do at Wembley, this is unlikely to be before 2024-5.

OK, so patience may be required before a serious US-style multifamily developer is operating throughout the UK. But make no mistake: Quintain Living are heading in that direction and, when they arrive, will turn the local BTR world upside down.

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