Moda Living (Moda), a leading developer, operator and owner of Build-to-Rent (BTR) homes in the UK, and joint venture partner Apache Capital have agreed a major corporate pre-let, signing 50 of 200 available apartments in the tower of the JV’s flagship Angel Gardens development in central Manchester.
The tower marks the launch of the final phase and the completion of Angel Gardens. The 35-storey tower goes to market for reservations later in June. This follows the success of phase one being 50% pre-let before the marketing suite opened in 2019.
Moda has also pioneered the launch of a special tenancy to allow potential housemates to come together and rent a 2-bed sharer making the proposition much more accessible to the wider market. The referencing process explores interests and hobbies to pair suitable parties and has already had in excess of 300 people enquire.
With 98% of rents collected either at estimated rental values (ERVs) or premiums during lockdown, Angel Gardens has demonstrated the resiliency of BTR as an asset class and particularly of highly serviced and amenitised BTR – also known in US, where purpose-built rental housing is well established, as Class A multifamily.
Data from the US, shows rent collection in high-end apartment blocks holding up well, with owners of premium apartment buildings seeing 94% of rents collected according to one analysis, compared to 80% for the wider US multifamily market.
With the corporate letting and 30 further lettings during April and May, Moda and Apache Capital’s announcements today highlights that despite the uncertainty facing the wider housing market, the BTR sector is well positioned to recover from the Coronavirus-induced downturn. Over 200 people are currently on the waiting list to reserve tower apartments in the final phase of Angel Gardens when lettings ‘go-live’ later this month.
Due to its simple, comprehensive lease structure and benefits package with no hidden charges, BTR is ideally placed to serve the immediate needs of customers. Moda’s market leading approach is responding to the demand from consumers looking for places to live.
Brand new research from JLL has shown that the most important housing priorities for renters have shifted – private outside space, faster broadband and a private home working area have significantly risen in importance. Pre-Covid-19, 79% of survey respondents worked from home less than once per week, and only 2% worked from home 3-4 days per week. Now only 18% of employees would hope to work from home less than once per week and 24% would like to work from home 3-4 days. The quality of the home environment is even more important now.
Moda’s all-inclusive amenities and state-of-the-art developments can perfectly satisfy these requirements. The corporate occupier taking 50 apartments at Angel Gardens who said that high-quality work from home facilities, a fully integrated resident app, a focus on health and wellbeing outside space and one of the city’s fastest internet connection speeds were the deciding factors. Combined with an on-site team that can deliver 24/7 cleaning, safety and security.
There is also evidence of a further emerging trend as the number of renters is set to overtake the number of home-owners in certain demographics. Research made public by the Royal Bank of Scotland has forecast that renters aged 35 to 44 will outnumber mortgage holders by 2029. It found the proportion of private renters in that age group will leap from 29 per cent to 47 per cent in the next nine years, as those with mortgages falls from its current level of 48 per cent.
Furthermore, the economic climate produced by Coronavirus is accelerating this trend with the economic uncertainty and rising unemployment making it harder for young families to save for a deposit, especially with savings rates at rock bottom.
Moda and Apache Capital’s developments are located in prime locations in cities across the UK to take advantage of this burgeoning trend and meet the needs of “generation rent”. The JV’s industry-leading neighbourhoods cater to a wide-ranging demographic including professionals, downsizers, sharers, empty nesters and young families. Residents will have access to a host of on-site amenities with mental and physical health and wellbeing benefits at its heart. Facilities include gyms and wellness zones, green spaces, roof terraces, communal lounges, workspace – all included within the rental price.
Challenging the current rental market, Moda will also offer deposit-free, pet-friendly renting with secure yet flexible tenancies to give residents a sense of ownership, alongside a 24-hour on-site professionally managed service. They also offer unique tenancy options including a flexible sharing tenancy that will allow individuals to rent a shared apartment without commiting to a joint tenancy – ideal for friends, young professionals and those just moving to the area.
The lower blocks opened to residents in October last year, with the first phase of pre-let in June using social media only.
Family-backed Moda, along with Apache Capital Partners, now have £850m of live schemes under construction across the UK – the first phase of its £2.5bn pipeline of over 7,500 rent-only homes. The JV is creating one of the largest branded BTR platforms in the UK, with investment from major UK and US institutional investors such as Harrison Street and NFU Mutual.
Moda and Apache Capital officially opened phase one of their flagship 530,000 sq ft, 35-storey, 466 new home neighbourhood, Angel Gardens, in Manchester in October last year, with practical completion of the final phase occurring this month.
Construction is underway at the JV’s New York Square in Leeds, with a further 515 homes, and The Lexington in Liverpool, a 34-storey tower on Liverpool Waters that will deliver another 325 homes. With additional projects across the UK including Edinburgh, Glasgow, Hove and Birmingham, the JV is on target to be opening 125 homes a month by the end of 2021.
Johnny Caddick, Managing Director at Moda, commented: “The future of living is changing; now more than ever it is focused on flexibility, connectivity and wellbeing especially in light of the pandemic. Consumer needs are changing – showing increased demand for workspace at home, greater connectivity and ample access to amenities. The pandemic has exacerbated these trends – our Angel Gardens development is seeing increased interest because it was designed with these needs in mind from the outset. At Moda we believe our ethos and focus on the resident experience puts us in a good position to meet the current market needs and our approach to renting is meeting a real demand for value and we’re glad to see this borne out in the numbers.
“Our build-to-rent projects are introducing a completely new way of living, providing more opportunities, amenities, options and facilities than ever before, with an especially strong commitment to their local communities and businesses.”
Simon Scott, Lead Director, UK Living Capital Markets at JLL, commented: “As the residential world starts to reawaken following the pandemic, Build-to-Rent is emerging as one of the most resilient real estate sectors. As an asset class, it is closely aligned to some of the needs emerging from the lockdown, from tech innovation that improves quality of life, to advanced manufacturing solutions that de-carbonise new stock, and build supply chains that reduce the cost of retrofitting old stock. BTR is also an asset class that serves a dual purpose of driving a commercial return and providing a true social good. We welcome Moda Living’ success and believe they are perfectly positioned to meet market demand for flexible and high-quality housing.”
Richard Jackson, co-founder and managing director at Apache Capital Partners, said: “Today’s announcements are a real testament to the quality of development we have created at Angel Gardens with Moda Living, having signed a major corporate pre-let, maintaining rent levels and achieved 98% rent collection rate during one of the most challenging and uncertain economic environments in recent history.
“COVID-19 has accelerated many pre-existing trends, such as the shift towards agile and remote working. As a result, consumers will want places to live that cater to flexible working patterns and, as the recent JLL research highlights, modern lifestyles more generally, which is exactly what we are providing in each of our build-to-rent developments with Moda.
“We remain committed to delivering our pipeline with Moda and as consumer demand for highly serviced, amenity-rich, purpose-built rental housing grows so will investor interest. Data from the US has demonstrated premium apartment block owners have seen higher rent collections than the wider market and for institutional investors looking for defensive assets with counter-cyclical qualities that produce long-term steady income streams needed to match their liabilities, what we like to call four or five-star build-to-rent will prove increasingly attractive.”