PRS in Liverpool: The rise of the private rented sector
At the start of the year experts predicted Liverpool would see £150 million of private rented sector (PRS) development announced in 2016, while several projects were already underway. With the rental market booming and purpose-built developments leading the way, Your Move takes a look how the city’s rental proposition is evolving.
Words by Christine Toner
Our attitude to renting has changed. While many of our European neighbours have always viewed lifelong renting as the norm, here in the UK home ownership was always king. However, in recent years we’ve been seeing a growing demand for good quality rental accommodation, particularly from young professionals.
Of course this is, in part, a result of the economic downturn which saw mortgage lenders tighten criteria to minimise risk and the size of deposits required soar. But the growth of the rental market is not just born out of necessity. Indeed, the way of life renting now offers is becoming a big draw.
“We’ve done a lot of tenant profile and demographic work recently,” says Alan Bevan, managing director of City Residential. “There is a change in demographic in the city centre. We’ve got older people coming to live here, we’ve got wealthy people, we’ve got people who don’t want to buy. I think renting is now a lot more socially acceptable. Renting in the city centre is seen by a lot of people as being quite cool again.”
And while our attitude to renting has changed, so too have our expectations. We’re staying in rental accommodation longer, actively choosing to rent for the lifestyle benefits it offers and as such we demand a certain standard. Alan says purpose-built PRS schemes are filling that need.
“Demand is growing for tenants, expectation is growing for tenants at a time when PRS is coming to the city.”
“People’s expectation of how their landlord treats them in terms of repair and maintenance is just growing and growing,” he says. “It’s tough out there as a landlord and PRS does potentially fill that issue. Demand is growing for tenants, expectation is growing for tenants at a time when PRS is coming to the city”.
And coming it certainly is. The last 12 months have seen considerable PRS activity with a number of new schemes announced.
After last year’s launch of The Keel phase one – the refurbishment of the 300,000 sq ft HMRC Building on Queens Dock, featuring 240 apartments, a residents’ gym and concierge – this year saw the announcement of The Keel phase two. The second stage of the project will see developer Glenbrook Property again team up with architects Brock Carmichael for a £40m project, developing 257 PRS units in two eight-storey new build blocks.
Just last month Moda Living and Apache Capital Partners secured planning permission for an £82m premium purpose-built rental development, ‘The Lexington, Liverpool’, at Princes Dock, which will form part of Peel Group’s £5.5 billion Liverpool Waters.
Peel Group is also in discussions to develop its own PRS scheme at its Princes Dock site though details have yet to be released.
Panacea Property Development has received planning permission for a £60m 16-storey apartment block on The Strand, although an investment deal has not yet been secured. Meanwhile developer Anwyl is awaiting a planning decision for its £50m scheme on Pall Mall. The Flintshire-based developer wants to create a 21-floor development, housing 338 spacious apartments.
A number of projects already underway are also nearing completion. Construction continues on the Baltic Village development in Wapping. The scheme, which comprises three housing blocks containing 324 apartments, as well as retail and leisure space, is being developed by Promenade Estates – although the firm has struck a deal to sell the site to property services group Vista Fund for £50m. Promenade will hand over the development to Vista upon completion of the build, expected in March 2017.
“The PRS sector will polarise quite quickly between those developers who have properly understood what makes a place work, and those who’ve merely ridden the market,” says Daniel Hynd, managing director, Promenade Estates. “All the research shows that the greatest guarantors of investors’ returns are low tenant churn and competitively priced rents – and that the main thing which reduces churn is not only setting rental levels that generation renters can afford but also people knowing their neighbours and being on more than nodding terms with them.
“We designed our development at Baltic Village with just this consideration in mind. Features including a residents’ lounge, meeting rooms, gymnasium and concierge are all designed to maximise interaction between residents and help them enjoy their home. It has a much greater impact on tenant stability than anything else, including location and views, although they help.
“Our focus on the social element was a key reason why we were able to sell the development for more than £50m before its completion.”
Meanwhile Bruntwood announced plans earlier this year for a £9.6m conversion project at office building Orleans House in the commercial district. The project, which will create 71 apartments in the Grade II-listed building, is expected to be completed in the summer of 2017.
There’s no doubt the PRS market is buoyant and Alan says any concerns about supply outstripping demand are unfounded.
“We haven’t really built much for the last seven or eight years,” he says. “It’s only now we’re starting to play catch-up with the demand. A lot of the early schemes have been quite student driven, and what we’ve not been doing is developing proper residential schemes, a mix of one, two and three beds. Now we’re starting to deliver those slowly but surely, so absolutely there’s a gap in the market.”
However, as is always the case with property, location is key. Alan says there is a band of locations surrounding the Liverpool ONE development (“from the John Lewis end of Baltic around Liverpool ONE to the Pall Mall and Tithebarn Street area”) which are seeing most demand.
Next year looks set to be a significant one for PRS in Liverpool with a number of schemes reaching completion and no doubt more investment to be announced.
“Demand is there and growing,” says Alan. “It comes back to the right product in the right location, but the demand is not going to go away.”
The future certainly looks bright.