[+] Build-To-Rent Growth Will Lead Drive to Quality: Arklife

The growth of the build-to-rent sector is driving a focus on quality and sustainability across all sectors as developers look to adapt to their customers needs, according to Arklife’s managing director Scott Ponton. Arklife has this week submitted plans for a 31-storey built-to-rent scheme at 50 Constance Street in Brisbane’s Fortitude Valley. Arklife, an ADCO Constructions platform, has proposed 327 residential apartments for the site, along with 1750sq m of office space and 680sq m of ground-floor retail. It will be Arklife’s third build-to-rent development in the Queensland capital after completing Robertson Lane on James Street and with its Cordelia Street site in South Brisbane currently under construction. Director Scott Ponton says the company takes learnings not only from its previous projects but also other markets across the globe. “We certainly don’t know everything but we do more broadly look into other sectors of the market. We look at hotels, because they are generally at the cutting edge of things,” Ponton told The Urban Developer . “We’re not trying to be a hotel, but we do find that they are at the forefront at curating common areas to raise themselves as a point of difference amongst their competitors. “Build-to-rent in the UK and multi-family in the US has changed a lot in the past six or seven years, and we actively follow the latest and greatest in the UK and the US, and we adopt some learnings from that.” As with any burgeoning sector of the market, there is a constant need to refine and adapt, he says. Constant adaptation While it already has two other build-to-rent projects in motion, Arklife is not adopting a “one-size-fits-all” approach to its new and future developments. “We’re always trying to do better on the next thing, which doesn't always mean bigger,” Ponton says. “We’re conceiving these things four or five years before they’re finished, but we need to have the flexibility to continually check and revise and fine tune as you go down the development process, which is what we do.” One of the adaptations Arklife has made at Constance Street is reworking the mix of apartments, which includes 50 studio units, 128 one bedroom units, 75 two-bedroom units and 74 three-bedroom units. “At Robertson Lane we learnt a lot in terms of what residents want,” Ponton says. ▲ A render of Arklife’s planned build-to-rent tower in Brisbane’s Fortitude Valley. “We developed a level of confidence in our product mix, apartment sizing and amenities offering. “We do a lot of benchmarking and understanding what are competitors, which everyone tends to do. We found that the average two bedroom is around 72 to 75 sq m, and there’s nothing wrong with that, but we put a few larger two-bedrooms in Robertson Lane and the demand for those has been quite significant. “Larger two bedders have a broader appeal to a broader market. You also end up with apartment layouts and sizing which are different from the fellow next door, and people have a real choice then.” This extends to the larger offerings at Constance Street, where Arklife has allotted 50 to 55 per cent of its planned apartments as one bedroom, but around 23 per cent as three-bedroom apartments. “We’ve done that because in the last cycle, around 2012-2013, most buildings that were available for rent were one-bedroom and two-bedroom apartments. “Our analysis found there is definitely demand for three-bedroom apartments, the rents are quite good and there’s good rental growth in that.” As a result, Arklife has experienced a diverse array of people at its Robertson Lane development and expects similar at Cordelia and Constance. “You come across a wide variety of people, from professional doctors, lawyers, accountants, to trade people and students, just a broad variety of people, and we try to create vibrant, aspirational communities around the subset for those people that fit within those age groups. “So we cater our apartment sizing and product needs to that understanding of our target market.” Making a BTR development work harder Constance Street is also a step forward in terms of sustainability, with 5-star Green Star design and as-built ratings, a 5-star NABERS residential, 5.5-star NABERS commercial and a 60kw solar panel rooftop array. “Sustainability is one of our core values and Cordelia has a similar sustainability array, and we will roll that out going forward. ▲ The rooftop pool at Robertson Lane. “We feel firmly that our buildings should be really energy efficient and that's what we're doing with those sustainability ratings.” A focus on sustainability in the built-to-rent sector is inevitable, Ponton says. “When I was doing office development, the Green Star ratings started to come in strongly. It’s now starting to take root in residential, and it will only become more prevalent. “[As a build-to-rent developer] you want to ensure that the building you create has an extended lifetime, based on the sustainability initiatives which continue to improve year on year. “In build-to-rent land, we’re all building buildings that we’re by and large going to retain ownership of, so we want to ensure the values of those buildings are underpinned by sustainability initiatives in the long term.” Sustainability isn’t the only ‘extra’ at Constance Street. The proposal provides a mix of complementary uses, including ground level retail, gym and recreational amenities. It will have 620sq m of ground floor retail space including outdoor eating areas, 872sq m for its gym, and 1788sq m of commercial office space on level 5. It will also include a studio, massage room, resident lounge and work from home spaces, a communal kitchen, games room, dining room, cinema and pool. These facilities provide for 2548sq m of communal, multipurpose space. Ponton explained that this focus on a mix of amenities was developed from their experiences at Roberston Lane and Cordelia Street. “We adopted an approach on Robertson Lane, which is 89 apartments, where we started with the gym. When you’re looking at value, if we provide a gym that's a viable alternative to a commercial offering, it just saves people money. “We have personal trainers on, we run classes and that sort of stuff and we find it very popular among our residents. “We put it on the same level as our office, because people generally have a reason to be on that level, and therefore bump into each other every few days. It’s become a social space at the heart of the community.” ▲ Of its time and place: Arklife’s planned Constance build-to-rent tower. Having a central hub has also meant that not only organised events but organic socialising has become the norm at Robertson, Ponton says. “We do simple things and the simplest things work the best.” The future of build-to-rent While developers consistently rework and redevelop what their built-to rent spaces look like, the fact is that the majority of them are located in CBD and inner city areas. But this could change as the sector grows, says Ponton. “I see the market continuing to evolve, and middle ring developments are definitely an opportunity at their own point of time,” he says. “I think the scale of the middle ring might be a bit different to the scale of inner city in some ways, but I do see a market in Australia for that middle and outer ring, it might just look and feel a bit different.” But Ponton has no doubt that the growth in the sector will continue, as a stream if not a flood. “From a commercial investment thesis, residential has the strongest characteristics out of any of the subsectors of the property in the market in the medium to long term. “It’s one of the few markets in property where the tenant market is ever expanding..and there’s a long way to go before we satisfy it. “I think it will be similar to the UK market. While some may look at the UK market as exploding in terms of the weight of capital coming into the market, really it hasn’t. “It was a trickle, then more came and more, and now there is a fair bit, but it took 10 years to get there, with the London Olympic Village being the stimulus for that. “While Australia might take a little longer, it’s heading on a similar path but has a long way to go before it competes with investor build-to sell scenarios. “With the players currently in the market building out their portfolios, I wouldn't say it's a flood, but it's a constant stream, and all of a sudden you'll look around and there will be more than you thought.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Build-To-Rent Growth Will Lead Drive to Quality: Arklife

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