A boom in student housing and the rise of co-living will change the face of towns and cities along the South Coast over the next 10 years, says property consultancy JLL.
The student housing market is booming and JLL predicts that it will account for £1 in every £10 invested in UK commercial property 2017. JLL says the trend is being replicated in Southampton as a result of the University of Southampton’s ambitious growth plans.
Southampton is also expected to see a big rise in the number of private rented sector (PRS) and co-living housing schemes – where investors buy up blocks of property for the purposes of buy-to-let, benefitting from both rises in value and rent. Co-living spaces are designed as a stepping stone for people who may have left university but don’t want to live on their own. Their collaborative living spaces appeal to small groups who enjoy the vibrancy of communal living.
The sector has grown substantially in major cities such as London and Bristol but is now spreading to the smaller regional cities, including Southampton, which already has one PRS scheme at the Fruit and Vegetable Market and several others in the pipeline.
JLL will be outlining its predictions at its annual Metropole event today (Thursday October 19, 2017), as it looks at what’s in store for the region’s property market and reviews how it has performed over the last 12 months.
Emma Eaglestone, JLL’s head of office in Southampton, said: “The decision by central government to lift the restrictions on student numbers within the university sector, coupled with the huge increase in revenue from student fees and increasing numbers of foreign students has fuelled a major investment across the sector in capital projects. We have witnessed this in all of the five universities across the south, two in Southampton, Bournemouth, Portsmouth and Chichester.”
JLL also predicts a big change in how buildings along the South Coast will be constructed over the next 10 years, with new homes being pre-fabricated like cars, in a process known as ‘modular building’. Off-site construction of modular housing is the modern-day equivalent of the pre-fabs of the 1960s which could alleviate pressure on the housing market.
Emma said: “Modular homes are generally quicker and cheaper to build and often of higher quality so it is a time and cost efficient process. This is going to become increasingly important in the face of the skills shortage faced by the construction sector as a result of an ageing workforce and a reliance on workers from the EU.
“According to the Partnership for Urban South Hampshire Region (PUSH), providing 4,160 new homes per year is a robust basis plan for the region’s housing market, and modular housing must be part of the solution.”
The region’s workplaces are also set to change as businesses become more focused on providing an environment that puts employee wellbeing at its heart. JLL has carried out some research into how the right workplace can help businesses thrive and its study of 40 corporations and 7,300 employees around the world shows that helping people feel good at work is more than a ‘box-ticking’ exercise.
Nella Pang, associate director at JLL Southampton, said: “Organisations can no longer just provide a space to work; they need to create places that enable people to achieve their ambitions. This is crucial for staff retention and wellbeing, and has transformational benefits to businesses.
“Examples in our region include Foot Anstey’s move to the White Building and Moore Blatch to Chandlers Ford. These spaces have been fitted out to provide flexible working for staff and the the changes they have made have had a positive impact on staff wellbeing.”
The region however still suffers from an acute shortage of employment space and JLL says this needs to be tackled.
Nella said: “The lack of supply is a serious concern. The gap in supply is partly being met by refurbished offices but this will only stem demand for so long.
“We are witnessing speculative development take place in out of town locations quoting £25.00 per sq ft, but we also need to be drawing occupiers back into our cities. Developers need to put wellbeing at the centre of design and create flexible floor plates with collaboration space.”
The lack of supply is replicated in the region’s industrial market with 0.5 million sq ft less space transacted so far this year than in 2016.
David McGougan, director at JLL Southampton, said: “The lack of stock in all sizes is a major problem. Occupiers don’t have the choice they need when considering their property options. In particular, there is a dearth of smaller units (under 50,000 sq ft) which is the bedrock of much of the region’s industrial activity so it’s crucial that more sites are unlocked for development.
“There are a number of speculative industrial schemes in the pipeline which will increase stock by 13 per cent by the end of 2018, but more is needed. We are seeing particularly high demand from the online retail sector, manufacturing and logistics.”
Emma added: “It’s a time of great change for the South Coast property market. Three of the region’s major urban centres – Southampton, Bournemouth and Portsmouth – are reviewing their local plans which will set the blueprint for how our region will be developed in the coming years. Achieving the right balance of housing, employment land and creating spaces that prioritise the health, fitness and wellness of the people that use them is imperative.”
