Navigating supply chain shortages in Build to Rent

Allsop discuss navigating supply chain shortages in the BTR sector. How do we navigate this climate while ensuring minimal extra costs and impact on residents and investors?

Station Hill, Reading, a scheme with supply chain required - Lincoln MGT | Allsop | BTR News
Station Hill, Reading. Image credit: Lincoln MGT.

By Lesley Roberts, Partner, Allsop

It’s safe to say that the property and construction sectors have escaped the worst of the pandemic. On the contrary – construction sites have largely remained open and home improvement projects have increased by 86% in the past year, as people seek to either expand or reconfigure their living spaces. However, this has contributed to longer lead times and increased prices for essential materials, like timber and cement. These issues, combined with labour shortages due to Brexit and the pandemic, are now having an impact on the whole industry, and Build to Rent is no exception.

Arguably, our industry is particularly vulnerable to supply chain shortages. Not only is Build to Rent experiencing delays in the scheduled delivery of projects, but we are also responsible for maintaining existing buildings and ensuring they meet the standards expected by the residents.

So how do we navigate this climate while ensuring that our tenants and investors feel as little impact and incur as little extra cost as possible?

Using our creative licence  

It is no secret that Build to Rent developments can command a premium for quality amenities and higher levels of staffing and service, and it is our duty as Build to Rent managers and operators to ensure they have a smooth and pleasant experience regardless of any supply-side challenges. As such we will need to be endlessly resourceful, creative and roll up our sleeves to keep occupiers happy.

Imagine there is a cracked tile in one of the communal areas – it may seem insignificant to those not familiar with our sector but Build to Rent professionals will know that it’s the little things that can make or break a positive customer experience, not to mention mitigating any health and safety risk. With some factories remaining closed and deliveries getting delayed, how can we manage this in the best possible way?

Consider buying a rug or moving the furniture over the area in question whilst freshening up the room configuration – this solution may well help avert an issue and showcase an alternative way to use the space. This is especially important in today’s day and age, when customers turn to Twitter, Facebook and Instagram to voice both their grievances and praise.

Reaching out to partners

This approach also applies when dealing with more substantial material shortages, essential for the timely completion of a project. In the first instance, it’s important to carry out a thorough analysis of what’s required and who may already have access to it. What often helps is joining forces with another company and temporarily sharing the same supply chain, even if it means paying a little extra. Plentific is an example of a company that has applied the aggregation concept with success, providing the residential sector with a platform to access a range of contractors who can support ad hoc needs when the additional contracting resource required wasn’t planned for. Despite these contracting costs, sometimes paying slightly higher for quick rectification; first fix, customer satisfaction and reduced admin, usually outweighs the outlay in these unforeseen circumstances.

Outlay during mobilisation is another consideration worth keeping in mind. Pre-completion, there is considerable outlay for mobilisation expenditure and activity involving a myriad of elements – site staffing, training, council tax on empty property, commissioning of systems and FM contracts, appliance warranty timeframes, marketing campaigns – to name a few.

During the pandemic many of us had to deal with delay dilemmas caused that were outside of our control. By working with partners, peers in the sector, contractors and our supply chains, we were able to negotiate scenarios to ensure a compromise that created a win-win. For example we had issues with registration on appliances which typically start ‘ticking’ once installed on site. With delayed developments, this meant warranties could expire before the appliance was ever used. By negotiating with the supplier direct, we agreed a bulk registration programme to start once the scheme was able to be occupied, and in return we promoted their brand as a feature of the apartment during lease up. We get what we need for our client and customers and they get brand endorsement. Win-win.

Flexibility and collaboration are key

The Build to Rent sector has become synonymous with agility and flexibility, allowing people to lead more fulfilling and comfortable lifestyles, and it is our job to use our ingenuity, connections, and creative ideas to ensure our tenants’ experience is not dampened by supply chain issues. When dealing with disruptions threatening the timely delivery of our projects, we should leverage our network and proactively engage with partners (councils, developers, investors, landlords) to find common solutions that would bring temporary relief to all.