Lavoie commented: “The short term rental sector is dynamic and fast-paced. In the wake of the Covid pandemic, many people were required to work from home where possible. While this is changing, people have experienced a new, flexible way of working and living, and they don’t want to go back. People can work from almost anywhere - as long as there’s an internet connection. What’s more, they are increasingly combining work and leisure, which means they require a home from home feel and space that can accommodate their family.”
The lines between work, travel, short stay and long stay trips are now converging. Flex living can also refer to accommodation that is tailored to guest/resident requirements - such as staying for longer or needing a desk to work from.
Lavoie said: “At Jetstream, we advise property owners and managers to embrace this change as we predict this movement will grow in 2022, given that 87% from a five-country Airbnb survey said they prioritise the importance of flexibility when they travel.”
The surge in Build to Rent developers and investors
The booming short-term rentals market is being driven by several factors. Firstly there has been a rise in nomadic workers and families who want to travel while living and working in different locations. They also want to stay in a homely environment with well-designed kitchens, bathrooms, and living spaces.
Then there are the Millennials, and the older end of Generation Z, who are now in their early twenties. Both groups are increasingly choosing to live in purpose-built rentals with luxurious and smart-wellness facilities as part of the package.
Indeed, experts at JLL estimate that the BTR market has the potential to increase ten times in size. The developers and investors that meet their tenants’ needs stand to make tremendous gains.
“The trend for remote working means there is an enormous opportunity in the Build to Rent (BTR) sector, which is already a growing and thriving industry in both the US and the UK,” Lavoie added.
“Many traditional property development companies have set up specialist BTR divisions, such as Legal & General and Quintain in the UK, and many expert developers have entered the space, such as Dandara Living and Essential Living. These are just a fraction of companies that have recognised the potential of BTR, and many more will follow. They understand the importance of providing high-quality flex accommodation for workers and families who want to make the most of living and working in well-designed, safe spaces.”
“What’s more, there has been a massive upturn in popularity among tenants who do not want to be tied down to long leases in often poor quality buildings that are badly managed. Given this demand, there is also a huge opportunity for investors looking to diversify their portfolios in new and exciting opportunities.”
What’s the Build to Rent investment opportunity?
Lavoie has some fascinating views about how the property investment landscape is changing. He believes that investors that tended to seek out traditional institutional real estate investments such as prime office buildings leased to blue-chip tenants on 25-year FRI leases will likely see a diminishing supply of opportunities. Coupled with that, companies that currently lease prime office space will find themselves needing far less square footage because it will be virtually impossible to insist all employees return to the office.
He continued: “We are already beginning to see the conversion of office and commercial space into short term rentals. Some BTR specialists are now making a name for themselves as agile (a word not often heard in the property industry) and are responding quickly to changing tenant needs and they are keen to learn about and embrace this trend. They operate in a far more entrepreneurial manner than many of the property industry stalwarts.”
“Technology has removed the barriers to entry and now the STR/flex space is easily accessible thanks to a dramatic reduction in operating costs. Reservations, revenue management, distribution, guest communication, guest screening and keyless entry can all now be automated on an outsourced variable cost basis allowing low entry costs and rapid scale-up.”
The need to embrace technology
New business models, supported by tech solutions, are emerging to enable investors, property owners and managers to operate efficiently and effectively in this booming marketplace. Proptech platforms, such as Jetstream Hospitality Solutions, allow investors to access the short-let market by streamlining operations and increasing ROI through a shared success model. Investors no longer need to go it alone and juggle all the complicated facets of apartment investment and management, they can leverage the support of all-in-one platforms.
Lavoie concluded: “By using smart tech, property managers can quickly switch to a short term rental offer when traditional demand tails off. This helps them to maximise revenues and increase their attractiveness to investors.”
“The tech does the heavy lifting in terms of distribution and operational tasks reducing the investment risk for owners through shared success models.”
“I firmly believe that the property owners and managers that use tech platforms with full turn-key solutions to handle all the essential processes such as channel marketing, distribution and guest communications will win in what is set to become an increasingly competitive sector.”
*Emmanuel Lavoie is the chief executive officer of Jetstream Hospitality Solutions, an all-in-one platform that helps developers to maximise revenues in the short-term rental market