With an increasing number of mixed-use schemes and developments across the country - which typically combine residential, retail, leisure and entertainment facilities, as well as co-working space and shared amenities - Property Investor Today spoke with Dotan Weiner, chief operating officer at LABS Collective, an entity comprising of three verticles: LABS (co-working), STAY (residential) and HOST (events spaces), to get his thoughts on whether such schemes are the future.
What do you see as being the major trends in residential investment as we move into the 2020s?
I believe we’ll see more mixed-use schemes, where residential is combined with additional services and facilities, in 2020 and beyond. Already commonplace in other countries, the UK has been slower to adopt this approach but the benefits of these developments offer compelling opportunity.
For the LABS Collective, our strategy to combine our expansion plans for LABS coworking with STAY serviced apartments, gives us the opportunity to benefit from the market growth on the residential element.
Tell us more about serviced apartments – how do they differ from Build to Rent? What do they offer?
STAY serviced apartments differ from Build to Rent schemes owing to the three key pillars underpinning the product: considered design, high level of service and flexibility.
Each apartment has been designed by the in-house LABS Collective team. We have established a consistent aesthetic across our portfolio of coworking, serviced apartments and event venues. Using neutral colour tones, natural light and rich textures combined with industrial details, all LABS Collective spaces are created for people to feel at their best; to inspire connection and motivate productivity.
Unlike Build to Rent, STAY serviced apartments offer the comforts of home but with services, facilities and amenities more akin to a boutique hotel. While based around community, STAY is not classified as ‘coliving’. All apartments are private, but we are including communal places and facilities, like resident lounges and gyms, that interact with LABS coworking spaces too. Residents of STAY have access to the wider LABS Collective environment; they are encouraged and incentivised to make use of the entire ecosystem.
STAY also offers a degree of flexibility that the traditional rental model doesn’t. There are no lengthy contracts, no utility bills to set up and no fuss with arrangements like housekeeping or WiFi. There is an increasing demand for this type of accommodation; largely from companies who want to provide employees who need to travel for business a home away from home.
Airbnb disrupted the hotel industry for both leisure and corporate travellers, STAY has been created for the discerning traveller, those who want an apartment feel but with the reassurance and consistent level of service, product and facilities that trusted hotel brands can bring.
Where does the investment in serviced apartments mainly come from? Institutional or individual investors?
Hotel properties and serviced apartments are increasingly attracting the attention of institutional investors. While the prime office market in the UK is suffering from limited stock, causing the pricing to hold up driven by the weight of capital, the FX play and low interest rates, there is still potential in the residential sector.
Another important reason for a shift in priorities is that the yields for the more traditional asset classes, such as office and traditional residential, are no longer so attractive. These investors are now watching the serviced apartment sector keenly, having realised the demand for temporary living is constantly increasing.
Will a Brexit resolution help the property industry to thrive moving forward? Has the constant uncertainty of the last few years had an impact?
The occupational market remains incredibly resilient, large multinational companies continue to target London as the place they want to be within Europe to attract the right talent. London is still seeing growth across multiple industries, especially disruptor technology. The LABS proposition suits this sector well and makes up 65% of our members. As the STAY product has been created with the same design and service principals, we anticipate demand from this sector here too.
The ongoing resilience of the market has been supported by the low level of supply. This has occurred because the lending market has been more conservative, and the credit market dried the amount of development in Central London. As the Greater London Authority have advised that around 80,000 additional rooms will be required by 2050, we’re confident there is a rising demand for a solution like STAY, and the whole LABS Collective proposition.
Do you think mixed-use schemes – combining co-working, co-living and event spaces – will be the future?
In all its guises and forms the co-working/flexible workspace model has seen exponential growth in the last decade. As flexible workspaces and co-working has become increasingly prevalent we can see this having an impact or influence on the hotel and residential offering, the traditional model is evolving, and business travellers require something different.
The key fundamental contributing to the success in the co-working sector is largely the flexibility it offers tenants. Hospitality, service, space, community and amenities are also key drivers; these elements are shared with hotels and coliving spaces.
STAY bridges a gap between hotels, co-living and the traditional rental model. We have identified an opportunity to offer professional services, beautiful design, access to community and considered spaces with flexibility across the LABS Collective proposition: in our workspaces, serviced apartments and event venues. The future, I believe, sees a continuing blur between these services and products, with vast potential for growth.