In the first of a new series of insights from leading industry figures, HomeViews talks with Pierre Melhado of leading US-based property developer and manager CA Ventures. From virtual maintenance and self-tours to copper door handles and refrigerated mail rooms, we discuss how the UK BTR sector must adapt quickly and accelerate the adoption of new technologies.
The UK Build to Rent sector is expanding rapidly but still has much to learn from the relatively mature Multi-Family sector in the US. With close to a 25-year head-start on the UK, the American Multi-Family model – a rough equivalent to our BTR – has become characterised by its openness to new technologies that are enhancing safety, quality, efficiency and profitability.
In order to better understand how the current lockdown should influence the design and management of new and existing BTR projects, we spoke to Pierre Melhado, the Managing Director of BTR Europe for innovative US-based property developer/manager CA Ventures.
With divisions covering student, residential, senior, commercial and industrial real estate, as well as hospitality and asset management, parent company CA Ventures operates throughout North America, Latin America, Mexico and Europe. Plans are underway for £1.3bn of investment in European developments over the next three years, and the company opened its London office in 2019.
The ‘proptech explosion’
Pierre, could you give us an overview of the various ways you see the Covid-19 crisis impacting both the design and management of BTR developments?
Covid-19 is going to accelerate the adoption of proptech as many people are being forced to adopt technologies they were once uncomfortable with. I think there’s going to be a consolidation of technology that’s going to lead to an explosion of proptech.
More than ever during this design phase it’s going to be important for developers to choose the right infrastructure and network. This will allow landlords to add or subtract technology at any time.
This new tech is going to foster a whole range of savings. Think about affordability of housing in London… these new efficiencies created as a result of adopting this technology can be passed back to the consumers and we’re going to have opportunities for more affordable housing.
The new normal
Right now in Hong Kong and South Korea, your temperature is checked when you’re entering a restaurant. Everyone’s wearing gloves. Everyone’s wearing a mask. Everyone is six feet apart. Hong Kong airport is trialling a disinfection booth that remotely kills coronavirus.
Airlines are going to change their design in planes, too. This is going to affect the way we all interact, the way all businesses operate on a daily basis. I think it’s a really good opportunity for both landlords and consumers to become comfortable with new technologies.
We can see how this technology can be beneficial because countries that have done well with the pandemic are countries that have spent a lot of money on technology. New Zealand, South Korea, Hong Kong, Taiwan – they’ve all spent so much money on technological infrastructure.
It’s a natural progression for BTR to address this quickly, and there are a number of areas where new technology is going to be adopted.
Can you give us some details on some of the new technologies you’re looking at, or have already implemented, at CA Management developments?
One example is self-touring, which has been used on American developments for a couple of years now. This is almost like the self-tours at a museum. You put on your headphones and you hear, ‘now you’re entering this area’. If you’re in the fitness centre, we can tell you all about the equipment.
If you’re not a fitness buff, maybe you go to see the dog walk area instead because you love your pet. Then you go into the apartment and learn more about the features that are important to you.
This allows for viewings that are convenient to the prospect’s schedule, although landlords can set restrictions on times so current residents need not worry that prospects are touring in the middle of the night. There is a self-validation process where the app verifies your ID and credit card info.
This really allows us an opportunity to customise our follow-up with the potential resident, because if you see that the resident has spent all this time in the kitchen, you know that the kitchen is important to them. There was a significant increase in the closing ratio for the properties where this product was used.
Augmented reality, AI and virtual tours
We’re seeing a lot of BTR operators turning to various forms of virtual tour to allow new prospects to research and sign up for new homes. How are you using this technology?
I have used virtual reality and augmented reality for apartment tours. Augmented reality is allowing the potential tenant to get in a space and play around with their furniture to see how it can fit. This is typically used on high end developments.
The virtual tour is using VR headsets or goggles to tour an apartment before it’s been built. I think the price of those goggles is going to keep going down because something like this pandemic is making it uncomfortable for people to physically tour apartments that they may be interested in.
Another area we have existing right now is artificial intelligence for interactions between prospects and the apartment community. That way, 24 hours a day, a prospect can tour an apartment online and talk to someone. Machine learning for this just gets better and better.
Video cameras are also going to become a lot smarter. For example, the technology is going to allow for a headcount of residents in amenity spaces to ensure that social distancing guidelines are being followed.
We’re going to have our cameras sense when a communal space is at maximum capacity. Once that happens, key fobs won’t allow anyone else to enter that space.
We can also map out restricted areas to ensure that management is notified if someone’s entering an area they shouldn’t be in. This makes all our jobs more efficient because we can continue to focus on providing excellent customer service and don’t have to spend time monitoring cameras.
New efficiencies for building management
Contractors are going to be required to check in with an app to avoid touch and ensure everyone’s within social distancing guidelines. This will hold contractors accountable and also add efficiencies to your building.
Now you can look at the app and know exactly how long a contractor is taking to repair an elevator. You’re holding them accountable to be honest about doing their job and you can look at your dashboard to see where all your contractors are at any time.
There’s also going to be a bigger push for site teams to work from home more. For our American properties we’ve been allowing our site teams to alternate, so half a team will be in the office and the other half working from home.
This, combined with the self-touring, VR, AR and video tours is allowing us to work more efficiently and change the mentality that the team always needs to be on site.
The quality of building management is the biggest area of complaint for our reviewers on HomeViews, with Build to Rent developments showing some of the highest management ratings. Quick responses to maintenance issues are flagged as being especially important – how do you see new tech helping with that?
On the facilities management side, tech is allowing us to address a lot of maintenance issues via video chat. Customers don’t feel as comfortable about maintenance entering their homes now, and we have to respect that.
We’ve seen at least 25 per cent of maintenance requests being closed out virtually. It’s often an easy enough fix that can be done via the video chat.
This adds a whole new layer of efficiency to maintenance. Now you can share maintenance teams between buildings. You can do more virtually and can schedule services at times that are convenient to the consumer. This has had an immediate impact for us.
That’s an interesting prospect, as another complaint we see regularly from owners is them questioning the value of their service charges. Any cost savings in that area that could be passed on to residents would be a huge benefit.
The highest-rated BTR developments on HomeViews all include active social programmes and stunning communal areas for residents. How do you see the future of those facilities in the light of social distancing measures?
We’re going to modify our designs to meet the new space standards that are inevitably going to arise out of this. We’ll have larger elevators, wider hallways and co-working spaces. Additional communal areas will also be needed because spacing standards are going to decrease useable space.
Many apartment communities in the US have already successfully created ‘alone/together’ communal areas. These allow residents to work in a communal environment without needing to socialise unless they choose to.
Now what we’re going to have to adapt to is ‘together/alone’ – safe spaces within new social distancing guidelines. One idea that we’re exploring really quickly is creating semi-private areas. These smaller areas will have large TV screens and refreshment fridges, and residents will be able to video chat, play games and stay connected to others who are either at home or in similar environments.
We need to create more instances of togetherness to solve isolation, which can have mental health ramifications. As working from home becomes more popular, these private areas will also address the need for residents to come down from their apartments to take a mental break.
Our reviewers often mention their building’s concierge services in relation to the sense of community, feeling safe and also convenience for deliveries and the like. What changes are you seeing in this area?
Mail rooms and fresh goods storage
One major change is that we’re going to have an increase in the size and functionality of the mail rooms where residents’ deliveries are kept. In all our properties in America we’ve also got a really big refrigerator where we can keep delivered goods fresh.
However, you’re going to also have to add functional layers to ensure cleanliness and safety. So, mail rooms are going to get bigger and bigger, and that’s something that’s definitely going to have to be addressed here in the UK.
What other ways do you see buildings being designed differently in the wake of the pandemic and social distancing?
Touchless technology is going to be key for reducing bacteria transmission. Elevators are either going to be voice activated or residents will have a key fob or contactless phone access.
Apartment communities tend to lag the hotel sector when it comes to technology. Whenever I stay at a Marriott Hotel, I don’t use keys – I just use my phone to get anywhere: the elevator, the fitness centre, my room, or to communicate with housekeeping.
That same technology is going to move over to BTR. You’re going to be able to do everything on your phone. More automatic doors, touchless switches, controlling everything from your phone. That way, your hands are never going to touch any of these surfaces.
One thing we’re also currently looking at is lighting that kills bacteria. We are also researching ionised cleaning and other cleaning solutions that repel bacteria and stay on the surface for about 30 days.
I think that’s really addressing a concern that a lot of residents have right now. They want to make sure everything is being constantly cleaned, and cleaned properly. Those are ways we’re going to address it.
We’re also looking at copper door handles for future developments because they have antibacterial properties.
Implied social barriers in design
I think interior design will really start to show both real and implied barriers between people in public and common areas. There is going to be this new understood standard of six feet of separation – similar to how ten thousand steps became a thing.
I think you’ll see things like planters, art pieces, carpet tiles and other decorative furnishings that allow for high design and openness to the space. But they’re also going to help create the implied barriers to maintain the social distancing standards that people are going to have to come to expect.
HVAC and elevators
We’ve recently been working on an HVAC report with Knight Frank and architects MSM. We shared that 28 percent of all our reviews mentioned overheating in new build properties – particularly relevant last year because we had a very hot summer.
New ventilation technologies are crucial, not just for the apartments but also for the communal areas, because that’s where you get the buildup of heat. What new technologies are you seeing in this area?
For HVAC, and also for elevators, new technology is going to be a game-changer and it’s really exciting.
For buildings that have a central HVAC system, we’re adding carbon filtration to the system to get the air to circulate more frequently and ensure that it’s cleaner.
When you look at the Internet of Things, assuming you’ve got the right network built in the beginning, you could latch on technology that will tell you whether your HVAC system is functioning properly. If it’s not functioning well, you’re not getting clean air.
AI will ensure the highest comfort for tenants while being energy efficient. You’ll be able to track that from a dashboard that’s telling you right away when you should have it checked out. The approach will be prescriptive versus the current reactive approach.
This extends to things like elevators. You’ll be able to track when your peak times are and shut them down for servicing when they’re being used the least. Those savings can be pushed back to your consumer.
This could be a slight tangent, but there is also an interesting conversation here about the impact on construction as well as the design and running of buildings. If you’re building modular homes, factory-made and brought onto site, then slotted together, you don’t have issues with social distancing of workers on site, or time lags with multiple different suppliers globally.
Would you say this is going to have the same effect on the construction industry, this sort of fast-track technology?
You’re absolutely right. Similar to all these new technologies, modular housing is going to apply in the build to rent world. Not only is it quicker, cheaper and greener, but as you say – fewer construction workers are involved in modular housing.
Look at the Greystar scheme coming up in Croydon [Ten Degrees – image above]. I think it’s going to open up a lot of developers’ eyes to look at modular projects like that – Greystar is definitely ahead of the curve in this area.
Setting your brand apart
Developers are going to be able to separate themselves from the competition by being very proactive with dealing with this pandemic. I think there’s going to be a resurgence of innovation teams and the production of white papers – a lot of sharing of ideas and technologies. This is really exciting.
Having a brand that resonates with the consumer right now is important. Consumers will remember which brands were proactive in addressing the issues during the pandemic and which were forward-thinking in their approach.
See what residents are saying about 20 UK Build to Rent operators providing outstanding service.