What's in a name? Defining operational living...

BTR - Multifamily - Single Family - Co-living - Later Living - PBSA

The operational living sector uses a wide range of descriptors to differentiate between its many asset classes. Are these descriptors here for the long term, or are they likely to evolve, or even disappear as the sector, and the individual asset classes mature?

BTR - Multifamily / Single Family

After PBSA, BTR is the most established asset class within the operational living sector, albeit it still remains in its relative infancy. As BTR has evolved over the last decade, the umbrella terminology has been subdivided to delineate between Multifamily (BTR in apartment form) and Single Family (BTR in individual house form).

Nothing wrong with defining between these scenarios but the use of the word ‘family’ in these descriptors could be considered something of a misnomer. Houses won’t always be occupied exclusively by families, even less so apartments. Nonetheless these descriptors are easily understood. Replacing ‘family’ with ‘household’ wouldn’t have the same ring but there’s a valid debate to be had as to whether there’s better terminology that would more accurately reflect that both apartments and individual houses could house an individual, a couple, a flat-share or a family.

Co-living | BTR

Co-living is always talked about as a distinct asset class within the operational living sector. But, articles I’ve read / events I’ve attended recently have made me question this, certainly in the longer term.

Co-living as a concept has been around in some shape or form for many, many years, but it is only now that it is starting to gain traction in the UK market. As it matures and gains increasing traction in the UK market, is co-living going to evolve into something less siloed? In the same way that what was originally known simply as BTR has evolved into Multifamily and Single Family, is co-living going to evolve into a further subset of BTR?

Whilst early co-living developments were close bedfellows to PBSA in adopting a typology based on clusters of studios arranged around localised communal facilities, this has evolved through a version based on studios with centralised communal amenities solely for residents to a version where these centralised communal amenities look both inwards to residents and outwards to serve both residents and the local community.

The move away from clusters for co-living makes sense in that harmony is not always guaranteed within relatively small groups that haven't developed organically but find themselves living in close proximity to each other. However, once there's a move towards centralised communal amenities, this raises the question of what is the difference between multifamily BTR and co-living aside from the former typically constituting 1/2/3 bed units and the latter typically constituting studios. In this context, co-living really does start to feel like it is already starting to make that transition to a subset of BTR - studio-based BTR?

A further blurring of the apparent delineation between multifamily BTR and co-living can be seen at Vita Group ’s Union co-living development in Manchester. Here, Vita let 2-bed and 3-bed apartments as co-living flat shares and, in doing so, they arrange the flat shares using flatmate-matching software and also underwrite each individual’s rent, taking responsibility for finding a replacement flatmate, should the flat share not work out and an individual feels the need to move on.

Different? Yes. More ‘micro’ than the original cluster typology? Arguably. A valid interpretation of co-living? Absolutely. As a fusion of BTR and co-living, Union is arguably BTR with an enhanced / alternative operational offering.

A contradiction to a suggestion of the merging of multifamily BTR and co-living can be found within the GLA’s Large Scale Purpose Built Shared Living (LSPBSL) guidance. This guidance limits ‘shared living, otherwise known as co-living’ unit sizes to a minimum of 18sqm and a maximum of 27sqm ‘to avoid them being used as sub-standard self-contained units’. The premise of this is that this guidance considers co-living units as ‘non-self-contained’. Whilst there is an exception noted that ‘larger units may be acceptable for occupation by couples’, the baseline position precludes 1-bed apartments - let alone anything larger - from being included under the co-living banner. Even with the ‘couples’ exception applied, flat shares such as Vita’s Union model would remain outside this definition.

In fairness to the GLA and their LSPBSL guidance, its focus isn’t on what the co-living sector might evolve into over the coming years. Rather, its focus is on providing designers, developers and planners with a framework within which to ease applications for co-living developments through the planning process where there has typically been a lack of understanding of what exactly co-living is. Whilst building in some flexibility, this guidance necessarily has to focus on co-living as it is in the here and now, not what it might become.

Ultimately, aside from the LSPBSL guidance, there is nothing in the descriptors ‘co-living’ or ‘shared living’ to restrict their use to solely studios and not 1/2/3 bed apartments. The critical factor is how the units are used. A 3-bed apartment occupied by a single family wouldn’t constitute co-living but the same apartment occupied by a flat share, particularly when facilitated by the operator, could be argued to do so.

Co-Living | Hotels

For a variety of practical and commercial reasons, one of the routes that some co-living developers / operators are following is to secure planning permission for C1 use, rather than the alternative route of securing permission under Sui Generis. There are many pros and cons of each approach but adopting the C1 approach, with the much shorter stays it permits, undoubtedly blurs the lines between co-living and hotel use.

The Social Hub ’s first UK development in Glasgow is an excellent example of this. Embracing The Social Hub’s hybrid hospitality model, this presents what The Social Hub describe as ‘a hybrid space with hotel rooms for tourists, co-living for travellers, coworking for digital nomads and a creative playground for entrepreneurs and locals’.

If co-living is focussed on the creation of community, it is valid to debate whether or not short stays facilitate this. Does a transitory community - as short stays would create - still represent true community creation and true co-living, or does it only result in temporary community? Is this really an issue or just semantics? After all, creation of community - irrespective of whether it is short term or long term - brings societal and wellness benefits. Long-term community is right for you if you’re putting down roots. Short-term community is right for you if you’re travelling and in transit. Neither is wrong - it’s all about achieving the right balance.

In a similar vein, re:shape ’s Ark Wembley co-living development also operates under a C1 permission. This enhances their ability to maintain a high occupancy rate by welcoming visitors to Wembley for sporting or music events.

Later Living | BTR

What about Later Living? Sure, if we’re including Assisted Living, Care and Extra Care settings under the Later Living umbrella term, it’s difficult to argue that these don’t warrant clear delineation because their offers are very distinct and specialised.

But what about Later Living where there’s no assistance or care component - i.e. homes that are simply developed, rented and operated exclusively for Over 55s / 65s? Aren’t these just BTR with age-appropriate design and communal amenities?

PBSA

Similar to the more specialised derivatives of Later Living, the descriptor PBSA is unlikely to disappear as it accurately describes a distinct clientele who are the sole purpose of these developments.

That said, due to the chronic undersupply of operational PBSA beds vs student demand - a situation that has significant potential to get worse before it gets better - the occupation of multifamily BTR and co-living units by students is very common. This demonstrates a practical blurring of a number of the asset classes within the operational living sector, albeit a blurring that won't result in the disappearance of the PBSA descriptor.

Multi-Mode Developments

Developers are starting to show an interest in mixing multifamily BTR, PBSA and co-living on single - admittedly typically very large - sites.

Recent research carried out by Lavanda has revealed that the PBSA, BTR and co-living asset classes are experiencing an explosion in the adoption of 'flex renting' strategies with rental terms, prices and lease lengths being adjusted to respond to demand and market conditions. As an example, 100% of PBSA operators consulted in the survey were expecting to adopt short-stays to some extent during 2024. A significant proportion of PBSA operators also expected the blending of PBSA, BTR and short-stay accommodation within the same developments to accelerate during 2024.

At Birchgrove ’s Ayrton House development in Mill Hill, Later Living and PBSA are being merged into an intergenerational development with the latter constituting circa 25% of units and communal amenities such as the gym being shared. The premise here is that the PBSA and Later Living asset classes represent demographic groups are most likely to experience loneliness and that living within the same development and sharing the same amenities can have a reciprocally beneficial impact for the wellbeing of both groups.

What’s In A Name?

What this discussion demonstrates is that, although there are some relatively standardised descriptors currently in use, there is significant potential for these to require reconsideration / amalgamation as this nascent sector, and the asset classes within, mature and evolve.

Is the use of descriptors such as multi-family, single-family and co-living just a necessary by-product of the nascence of these asset classes; an aid to define new concepts to help a wider audience to understand what they are and to help developers and operators market their product?

Will they in time - as the individual assets classes and the overarching operational living sector mature - start to fall away, save for the PBSA / Assisted Living / Care exceptions we’ve already mentioned above - and be replaced by more generic umbrella terms?

There’s no right or wrong answer here. No one can predict the future with absolute certainty. Much will depend on how market forces - resident preferences, investment drivers, branding strategies - and the planning context influence the evolution of operational living.

One thing we can be sure of though, is that operational living is an exciting sector to be involved in, its ready for take-off and will provide anyone involved with a fascinating ride over the years ahead.

Antony Stivala is a Project Director at EPR Architects, specialising in the residential sector and chair of EPR Architects' Alt/Resi Group (an initiative to drive EPR's increased involvement in BTR, Co-Living, PBSA and Later Living). He was part of the EPR Architects team that delivered the York + Elder BTR development in Brighton for Legal + General.