As John Lewis targets sites either above or near to existing stores on the high street, data suggests renters are ditching city centre living in favour of homes in the suburbs and smaller towns. Which poses the question – is there really a case for BTR on the high street?
Around the same time John Lewis announced its plans, research from estate agents Hamptons International indicated a growing trend of renters moving out of London and looking to the suburbs. According to its findings, 63% of renters who moved to a bigger home chose to leave London to do so, with remote working and green space cited anecdotally as reasons why people wanted to move out of the city. But this trend isn’t just in London. Research also carried out by Hamptons found in September that villages and commuter towns were growing in popularity with 34% of renters demanding extra space in Q2, up from just 25% in the first three months of the year.
Some people may argue these trends will be short term. Influenced by the pandemic, we have all had to change the way we live and work, meaning we have new habits and new priorities. How long this continues post-pandemic only time will tell, but according to SpareRoom, more than one in ten renters plan to leave London and never go back to city living after the pandemic. When you add to this the appetite for remote working to continue after Covid-19, a YouGov poll found just 7% of respondents want to go back to the office – all the signs point towards the trend for renting in rural suburbs areas becoming the norm.
It doesn’t come as a surprise that retailers are turning to BTR for new streams of revenue – after all, it’s a booming market. In Q3 of 2020, £1.43bn was invested in BTR with the overall value of the market now at £14bn – for a developing market, it boasts impressive figures.
Councils, local authorities and businesses are searching for solutions to resurrect the high street, but demand for inner-city rental properties is likely to be in tough competition with high-quality suburban BTR homes. In 2020, we witnessed the demand first-hand for properties away from the hustle and bustle of populous city centres. This shift in demand from your “traditional” city centre blocks to suburban homes with gardens means more investors, developers and BTR providers are turning their attention to those areas, tapping into locations such as Wolverhampton, Rotherham and Boston. In the last 18 months, our team has secured £60m of funding from ICG Longbow as well as a further £100m from Triple Point – indicating a real appetite from investors, not just renters.
It’s safe to say that no-one has a crystal ball to see exactly how demand might shift following the pandemic. But, current rental trends show strong signs that city-centre living is on the back foot and moving out of the city for extra living space and access to green spaces with no need to live near the office is taking precedence.
As the high street continues to struggle it’s clear that different thinking is needed to help regenerate areas that have been such an important part of the way of life in the UK for so many years – whether BTR is the answer, it remains to be seen.
Paul Staley, Director at Wise Living.
First published by Blue Bricks Magazine.