The Management Recruitment Group’s James Gregory and Hayley Mintern sat down with Jeremy Fletcher, Chief Executive Officer at Fresh Property Group, as part of the Alternative Investment Series: BTR Vs PBSA. A thought-provoking piece with large emphasis on the resident experience.
How have you found your transition from Build to Rent into a leadership role focusing on the dual asset class incorporating PBSA?
There are a lot of similarities between the two but one of the key things we focus on at Fresh is the wellbeing of our residents. It is – of course – imperative that this remains at the forefront of our thinking. We are ultimately trying to provide our residents with the best value for the price they pay and ensure life for them is as easy as possible. To achieve this across both asset classes, we work extremely hard to recruit the right team members to ensure the highest standards in delivery.
Some of the differences I have found since moving to Fresh include dealing with multiple investors who possess a broad set of expectations and aspirations. Fresh has over 25 clients, ranging from family investors, pension funds, and institutional investors and each has to be carefully worked with and understood.
The other key difference to note is the annual marketing budget and how this is distributed across the year. With the PBSA sector being a more cyclical market, it is easier to allocate direct marketing at certain pinch points to make sure the Fresh brand is visible at the right time. In BTR, the budget and presence of Fresh across various platforms is more evenly distributed.
Why has BTR proved such an attractive investment vehicle for various funds over the last few years?
Without dissecting the finer details relating to the lack of bond yields and investors looking elsewhere for a higher return, I think the main reason is the stability of the sector. When considering this, we have to think about the consumer trends as well and how the millennial market is now more comfortable with a long-term rental agreement.
The stability is also credited to the perceived resilience of the residential rental market. This has been proved in the North American Multifamily Market that was less affected than most areas of the economy through the Global Financial Crisis in 2008. Institutional investors and pension funds look closely at these statistics, as well as the ones indicating the general shortage of rental homes in the UK, when looking where to invest their capital and signs are looking positive as more investment pours into the market in 2021.
What is your take on trends in the amenities market and how important do you think flexibility of space is when considering design for these areas?
From my perspective, the one thing that I have to throw caution on straight away is the risk of getting involved in an amenities arms race. Of course, it is important to give residents access to up to date spaces to relax, exercise and spend time with friends/family, but we need to err on a side of caution when looking at lavish, novelty spaces that will be high in cost for the residents and low in use. Any cost put into a development will ultimately go back to the resident on their rental price.
Flexibility in amenities spaces is vital in this regard for a couple of crucial reasons. Firstly, having dedicated areas for working from home isn’t the sensible route to go down in my mind as they only get used 15% of the time which isn’t great value for residents. Instead, it is better to adopt spaces which have purpose but aren’t narrow in use, which I have seen in more modern buildings like Onyx in Birmingham or Calico in Liverpool.
We really do listen to our residents across our 23,000 units and I think that has been seen in the evolution of our proposition in the last 10 years. I think this also puts us in a unique position to anticipate demand then advise our clients incredibly well in relation to what the customer wants. We often get involved in the design phases of developments alongside clients, advising them on what we think would work best based on what our residents are telling us.
What is the role of Proptech in BTR and PBSA?
Proptech is an interesting one because it obviously has its place in the residential market, but this cannot be at the detriment of contact with the customer, which is such an integral part to why Fresh is an industry leader in this area. There are places where technology can make life easier for residents and at this point it becomes valuable and useful. An example would be keyless access, this isn’t something that a human does for you anyway and is therefore a positive for our residents. This is also beneficial as we can see who is on site at any time, which is useful for fire safety.
It is vitally important for anything app based that it is integrated into the solution. When working with Yardi recently, the first thing we wanted to make sure in the spec was that it was fully integrated and not a bolt on. This is really important from a data point of view. Resident apps are important and convenient for paying your bills and booking spaces and makes it more convenient for us as a management platform.
Interestingly we surveyed our residents across our buildings about the electronic thermostats they have in their apartments and on their phones and 60% came back saying that it wasn’t very important for them and they weren’t too concerned with whether they had them or not. This is why measuring resident experience and communicating with them frequently is important.
Having worked with you before Jeremy, I am aware that you don’t limit your operational hiring to just the property sector. Can you talk to us about what you are looking for when you are hiring and what sectors you have explored in the past?
As mentioned before, our DNA is all about deeply understanding our residents and their needs. So in order to understand a customer, I don’t need someone to have worked in property for 20 years and be qualified in certain areas. Instead, I look for the right attitudes and behaviours that cannot be taught. In customer facing roles, especially when interacting in their homes, you need to have a certain level of understanding, care and empathy which allows you to walk in their shoes and make their lives better.
Hires could come from Airlines, hospitality, retail, leisure – it doesn’t really matter to be honest, so long as they are passionate about providing a 5* experience. We have just hired an analyst that has come from a hospital background. This isn’t the first place you would think to look for a property business but actually this individual really understood our journey and had the right level of skill and attitude to fit the brief.
I empower all our teams to look at talent, potential and attitude. We can train people to manage a BTR development from a technical standpoint and we have great induction and training schemes to do so, but we can’t teach a positive attitude.
What is your vision for the Fresh brand name and what does it stand for?
Fresh is unique, we are a multi discipline specialist in the residential rental market. We solely manage property on behalf of investors in both fields and execute this very well. We don’t get involved in investment, we don’t get involved in asset management, I don’t have an arm that does sales. For this reason, we focus on doing what we do best, delivering outstanding resident experience and providing great value for our customers. It is fairly simple when said like that.
How is Fresh measuring customer experience and looking to stay ahead of other management providers in the alternative investment market?
A lot of my background focuses on customer insight, including my time with Kantar, and with this comes a good understanding of how we can improve this area. We were excited to announce our new partnership with Medallia who are one of the leaders across any industry in providing outstanding levels of feedback from residents. This will transform the way we use data and listen to our residents. Using Medallia’s tool will give our people both on-site and centrally the best information to make decisions and work with our clients to stay ahead of the curve, so our buildings are the place to be for residents.
What is Fresh doing to support their residents with Mental Health across their buildings?
Firstly, I think it is a deeply important issue that must be at the forefront of every provider’s mind when assessing their priorities. Around 1 in 5 students have been diagnosed with mental health issues and if you consider a building of 1,000 residents this means that 200 will be having real daily challenges that they are dealing with.
How do we as an organisation then deal with this? Because it is really serious. Last year we launched the BE Programme, which is fundamentally focused on proactively supporting good mental health and wellbeing. This is incredibly important to everyone within the Fresh community and is in place across all our buildings. Mental health isn’t just a student specific problem, it’s a reality of the world today. I’m proud that each of our General Managers is a qualified mental health first aider and has attended a 2-day training course designed to prevent and assist those dealing with these problems. Signposting is a vital part of this and making sure that people are given the right directions to professional support if needed.
This isn’t just about providing the residents with the support, but also equipping our General Managers to deal with issues themselves and support their team members with any issues they are going through.
Ultimately this is all about creating one community that cares about one another.