The Student Hotel concept in the Netherlands combines a number of uses into one development: hotel, student accommodation, private rented residential, co-working and restaurant with some shared facilities.
Dubbed ‘omni-development’, The Student Hotel describes itself as a ‘complete connected community’ but could this concept take off in the UK?
Different styles of living that combine communal space are what differentiates omni-development from traditional mixed-use development. Students who enjoy the co-living experience they get from purpose-built student accommodation can move into the build to rent (BTR) space in the same building perhaps using the co-working space too.
The pull of community should not be underestimated. Increasingly BTR includes shared space as part of its design as landlords find that tenants are more likely to renew their lease if they have got to know their neighbours. Communal space helps facilitate those relationships.
Brands such as The Collective and WeLive are aimed at demand for co-living style concepts for those who are working rather than students.
Andy Barnard, partner, at Trowers & Hamlins says: “We’re beginning to see student and BTR accommodation coming together in the same asset.”
It makes sense from a business point of view to align the concepts, for example as a deal Amanda Hanmore, partner and lead of Trowers & Hamlins Birmingham real estate team, was involved with in Manchester, indicates.
“Select, which traditionally has invested in student accommodation, has seen an opportunity whereby it can capture its clients or tenants after university and transfer them into a similar sort of environment,” she says.
There isn’t a hotel element like the Netherlands’ The Student Hotel but it’s a very similar sort of arrangement where common areas are shared with the same management services for both.”
At the moment the student and BTR accommodation are separate but run with similar styles of communal space and events in order to create continuity. Combining the different styles of accommodation into one building could be the next step.
Taking the omni-development concept one step further, the offer could be broadened out to include senior living and family accommodation.
Barnard says: “We’re increasingly seeing people wanting to look at their developments on the basis that they’re providing accommodation that works all the way through different ages, rather than having just one of these groups on the site, actually having lots of them together and generating a much more interesting place for people to live as a result. Ironically, the difficulty for some investors could be the breadth of the offer in an omni-use development. Some might have promised their customers something more restricted. But there will undoubtedly be others who see great benefit in diversifying their risk.
The Channel 4 series Old People’s Home For 4-year-olds highlighted some of the benefits of mixing facilities for children and retired people.
Traditional mixed-use development works because the different uses feed off each other and create continued activity throughout the day. Mixing facilities for senior living and children with students and working-age residents you create something akin to a village in one building.
Barnard explains: “So you have a building with common areas on the lower floors and that can be used by the older generations and pre-school during the day and then students and workers join them in the evening.”
All of which is great in theory but the reality of delivering omni-use development is dependent on planning and financial viability.
Hilary Blackwell, partner, Trowers & Hamlins, says:
With this sort of development you will immediately start bumping up against planning rules and space standards is an obvious one if your individual living accommodation is smaller to balance the communal space.”
Barnard agrees: “Trying to persuade a planning authority that you’re going to have all multiple uses in the same building with the same entrance with common space – I’ve no idea how they might react to that. Student accommodation, for example, normally uses its own specific planning use which is different to normal residential.”
There is also the challenge of setting the service charge to pay for the communal facilities. How do you ensure a fair price for different tenants and use?
Blackwell says: “You have that in mixed-use buildings where you may have to divide who are using the lifts and who isn’t and you do have to get into some quite complicated service charge arrangements.”
For investors, the key challenge is determining risk, particularly as these operations are reliant on good management.
Hanmore says: “You have to incentivise the managing agent to deliver the income to the investor and to what extent does the managing agent take that risk? Probably the most difficult aspect after development and construction are paid for is the managing agent able to deliver the income and who takes the risk when there’s a void?”
With demand for residential space so high, particularly rental accommodation, it could be argued that the potential for voids is less risky and mixing in other uses can also help mitigate risk.
Given the trend for co-working and co-living omni-use development is an interesting concept but there are challenges to overcome. Blackwell concludes: