“I think development is an incredibly misunderstood profession. People's perception is that it's, it’s fly by night, it's easy, everybody makes a fortune, build any old bit of crap and botch it and scarper, you know, not my problem. And development is completely different to the public's perception.”
Susan Freeman
Hi I’m Susan Freeman, welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today I am delighted to welcome Robert Sloss, co-founder and Chief Executive of living-led developers HUB. Robert has been an entrepreneur in property and development for over 25 years. During this time, he has created a series of real estate investment and development platforms, primarily in the residential and office sectors. Robert has a passion for vibrant urban living and the need for the built environment to reflect changing human demand. As a result, HUB was one of the first developers to recognise that changing UK work practices would drive the need to repurpose redundant office buildings for living uses. Robert co -founded HUB in 2012 and over time it's become a leading UK, BTR-led residential developer with more than 9600 homes completed or under development across the UK. A pioneer of both BTR and co-living, HUB continues to deliver industry-leading developments, including the award-winning Queen’s Quarter in Croydon, One Maidenhead and the Yardhouse co-living scheme at Wood Lane. HUB’s adaptive reuse strategy, in line with its commitment to urban regeneration and sustainability, continues to bear fruit. As well as Cornerstone in the Barbican, the first co-living planning consent in the City of London, HUB has Assemblies in Minories, which has recently become the City's second co-living consent. So now we're going to hear from Robert Sloss about HUB, the evolving living sector, and the challenges of successful urban regeneration in the current climate. So Robert, good afternoon, thank you for joining us.
Robert Sloss
Thank you for inviting me, Susan.
Susan Freeman
So, it was really good to meet you at MIPIM, which now feels like more than a few weeks ago. What did you make of it this year? What, what do you think was the mood and were there any surprises?
Robert Sloss
No, I think the mood was very cautious. I think that probably less optimistic than last year but perhaps there is more to be optimistic about perhaps but undoubtedly overriding caution, I would say.
Susan Freeman
I think that's probably about right and a lot seems to have happened for HUB actually in the intervening few weeks in terms of sub acquisitions, planning consent and obviously we will talk about that but let's start just with your background and I wondered whether real estate was something that was in the family or what actually sparked your interest initially?
Robert Sloss
So, a little bit in the family and I think I came out of school not really knowing what I wanted to do except I didn't want to be a doctor like most of my family so I had to think of something else to do, ended up on a real estate course, slightly wondering what I was doing there and then the penny dropped for me summer 1989 at the end of the ‘80s boom when I got a summer job working for Edward Erdman in the West End and it was a very busy time, lots of big phones and lots of deals happening and I suddenly thought this is pretty interesting, I understand how it works and I felt I could do it and that really was a sort of turning moment when I thought, yes, this is what I'm going to do.
Susan Freeman
So you started an agency?
Robert Sloss
Yes, it was sort of south-west offices and West End offices. I was doing, posting letters for people, you know I was doing anything to make myself useful for the summer really but also, sitting around all these people who were structuring deals was pretty invective and it was clearly a very, very different industry back then. Way less profession and you could argue there were a lot of things that were worse about it then but also, there were big characters and you know really stand out individuals that I think I’ve always been quite influenced by from coming through the end of the ‘80s and into the ‘90s and I worked for a while for a man called John Beckwith of LET fame and I think those entrepreneurs probably were always in my mind as I came into the industry.
Susan Freeman
No, I agree with you about the big characters and I’m always sort of looking at the next generation coming up to see if there’s anything similar.
Robert Sloss
I wonder whether there is as much room for characters as, as there was. And we live in a very data driven, very quants driven industry and I wonder if some mavericks have so much of a place as they used to.
Susan Freeman
Yes, as, as John Ritblat said to me when I asked him that question, he said it was much more forgiving then, you could make mistakes and get away with it.
Robert Sloss
Yes, I think that’s definitely true.
Susan Freeman
So, who did you start with then?
Robert Sloss
I started 1 September 1992 with Knight Frank & Rutley in the City of London, 32 Coleman Street, I needed an A to Z to work out how to get to the office and, you know, I was that green, but it was a really interesting time, super tough market, couldn’t have been any more different than the market in 1989 when I’d been at Erdman’s, the contrast was huge, but it was a really tough Knight Frank City office that was making things work with so much difficulties and very talented individuals in the office, that was run by Mike Soames, current senior partner Will Beardmore-Gray was in that team, and I as a very green graduate learned very quickly from some talented people.
Susan Freeman
So you, you know the City pretty well, we’ll come back to that when we talk about some of your current schemes.
Robert Sloss
Yes, I think those days have helped in the current strategy. But I then worked for Jones Lang before starting an MBA and then switching over from agent to client when I started working for Europa.
Susan Freeman
And did you find the MBA useful?
Robert Sloss
Did I find it useful? I think on the whole yes, I did. I think, why was it useful? Being put together with a group of people from different industries, realising that perhaps coming from real estate you weren’t necessarily the thickest person in the room, learning to do things with people of different skill bases was I think the biggest learning, just getting thrown together with a group of people and you had to deliver a piece of work within a set time period was very, very handy, I think. So, I would say yes.
Susan Freeman
Interesting that you, you mention the collaborative learning because I found the same thing at, at London Business School, because there, there were people from all over the world, different cultures and actually, you know, the thing that was really quite surprising was how different people were in the way they negotiated and you know did deals because they came from different cultures.
Robert Sloss
I think appreciating different cultures and just generally the different approaches within group work is essential to how you get, how you get the best result, particularly in development and understanding people's different skill sets is vital in development because it is a multi-dimensional problem that you have to solve every time and you need to be very collegiate in my view to just to conquer complex problems.
Susan Freeman
And you started HUB in, in 2012, which was, again, I mean, an interesting time, I mean it was a few years after the GFC so, presumably not the easiest time to start a business?
Robert Sloss
I'm not sure there's ever an easy time to start a business, but it wasn't easy, it was hard to get capital of course, coming out of GFC, but the opportunity looked very clear. There was a lack of funding going into, shall we say, mid -market London residential, you had this huge piece of infrastructure and the Elizabeth Line coming through and it was easy to explain to people why we were trying to do what we're trying to do. We also could see that multi-family BTR was going to come into the UK. I would say that early discussions with a lot of people about BTR ended up with us being laughed out the room and there was a huge amount of cynicism, it'll never happen, etc, etc, people can't afford it. Well, I think we've proved that wrong and so, it was difficult, we, as you always need at the beginning of business, we had a bit of good fortune, we got some early backing and we found a couple of, with the benefit of hindsight, a couple of fantastic opportunities that got the wheels moving in the business quickly and the first two was our Rehearsal Room scheme in North Acton and also Hoola in Royal Docks, which has become in many ways a significant project for us, it got us going. I was, I was at the two buildings last weekend and I think they've stood the test of time really well and I think one of the key things to good development is actually going back to your buildings and looking at them and saying, "Did we do a good job? Have these buildings stood the test of time? Do they still serve their purpose well?" and I think if you look at Hoola and the fact that it's heated by excess heat from the Excel exhibition centre in a day, in an age when the letters ESG were not around, I think it is a very good piece of legacy for HUB.
Susan Freeman
No, you were sort of pretty early adopters, I think, and I, I remember having to try and educate people on what Build to Rent was, you know, even before the label ‘Build to Rent’ stuck. So it's interesting because I imagine you have learned a lot along the way so actually going back, you know, to see what you did in, you know, in the early days is quite a test, isn't it?
Robert Sloss
Yes and I think the first Build to Rent scheme we funded, which was, depending on how you define it, certainly in the first three in the UK, was Rehearsal Rooms in North Acton. If I look at that, essentially it was a slightly tweaked build for sale scheme. None of us really knew quite how this building was going to work, you know, there was a tenant amenity area but we didn't quite know why it was gonna be there or how tenants were going use it and, and the funding market was tiny, I think there were two or three parties there who would fund something like that and we were fortunate enough to find a, a partner in M&G and that in doing one of the first forward funding deals in multi-family BTR, suddenly, you know, to coin a phrase, “in the land of the blind, the one-eyed man is king”, suddenly people were saying, "So ah, you're the BTR guys” and we were like, "Okay, yeah, we are." And that then helped us build on that track record and do other forward funding deals but it's true to say we were all very much 12.03 when it came to Rehearsal Rooms in North Acton and we learned quickly that first generation stuff, when you look back now, it's very easy to look back and criticise it but without that, there would be no second or third generation BTR so it was very important that those things happen.
Susan Freeman
What generation are we onto now, do you reckon?
Robert Sloss
That was a good question. I would argue we’re coming into third generation and the way I would define third generation is perhaps a more utilitarian multi-family BTR with more focus on living space than perhaps the amenity and I think that is going to evolve going forward, trying to make as much of these buildings income producing as they possibly can and simplifying the operations.
Susan Freeman
So, what is the size of the portfolio now? You know, as I said, a lot seems to have happened even in, in the last few weeks so, how many sites and what is the value of the portfolio now?
Robert Sloss
So we’re 27 deals closed and working on a 28th. The portfolio, if you add everything up in terms of GDP it’s about 3.4 billion in sterling and most recently, I would say we’re on the third, coming up for the third generation of HUB projects. Gen 1 was very much our Elizabeth Line focussed London-based residential schemes. Gen 2 was the regional, principal cities strategy and now Gen 3 we’re back in the capital, really driving our ultra urban approach, developing out more co-living assets. The most recent piece of news being the second planning permission in the City of London with our Assemblies project which came out on Monday and so, we have sort of had, moved through different phases of the business, still working slightly back to our roots, back in London, to go right back to when I started at Knight Frank, being back in the City, walking through streets that are embedded in my memory and knowing, still knowing perhaps where good locations and not so good locations are and how quickly things change around the City in terms of what is good or not so good, has been very helpful in terms of building up our portfolio of assets around the City of London.
Susan Freeman
I mean it must have done because you, you must know most of these buildings and the pros, pros and cons.
Robert Sloss
Yeah, I think you know if you’ve been around a little bit in real estate when they’re knocking down buildings that you were involved in the design and delivery of. But yes, it’s been really interesting sort of coming back into the City and seeing perhaps some old friends and having the opportunity to pick up a few and give them what I would call a second cycle, you know the offices that are coming to the end of their functional use as an office, giving them a rebirth and then bringing people to live into the City centre and around the core of 550,000 jobs, where there’s very little of what I would call interim accommodation for people who are working long hours in the City and who may not have a lifetime ambition to live in London but maybe are working here for six to eighteen months, I think. What we’re trying to do is meet that demand that I think is very much unmet at the moment.
Susan Freeman
Well, there certainly hasn’t been much living accommodation in the City so, this is all quite new isn’t it.
Robert Sloss
Yes, I think we’ve, we’ve worked with the Corporation very closely in terms of understanding what our interpretation of co-living is and, as I say, why we think it is really valuable. It doesn’t take away from the quality of the working environment in the City, I think it actually adds to it by allowing people to live close and perhaps making the City less of a blank spot after say 7/8 o’clock at night or during the weekends, so actually bringing some people to live in the City, I think is a good thing.
Susan Freeman
I think it’s a really good thing and with, you know, destination cities and the idea of you know having an environment that is happening sort of seven days a week, I think you need that. And in terms of the portfolio, is critical mass important and, and what are you, what are you aiming for in terms of, of size?
Robert Sloss
I don’t think we have any given goal to say “Oh we need to be 5 billion” or anything like that. I think it’s about, we’re very strategy driven and if you look at the ultra-urban stuff, there is a very distinct strategy as, as to where we want to be and what we want to do, that has also been under, underlined by our approach to repurposing office building rather than purely ground up newbuilds so, three of our co-living projects are repurposing offices but we also have three ground up newbuilds so, the strategy, meeting the demand, is absolutely clear in what we do so, if we go right back to multi-family BTR we could see that there was a demand for this in well located, well transport serviced areas of London, I think. To be fair, I think that that demand still exists today and I think if anything it’s even more acute than it was when we started. I would very much like HUB to be developing into this next generation of multi-family BTR in London, I think the demand and the need for it is absolutely there. The ultra urban strategy, I’ve explained, but it’s very specific, our interpretation of co-living within that is very specific and so, you know, we don’t say oh we’ve got to be X or Y, it’s, is this a good strategy and how do we deliver it is much more important to HUB.
Susan Freeman
And how do you differentiate between BTR and co-living?
Robert Sloss
So, our co-living strategy is very specific, very locational in terms of central London, often in those locations that I would say that BTR is hard to deliver, hard to make viable. I think that for us, certainly within the context of Greater London, our BTR strategy is better from Zones 3 outwards. We find that viability is stronger. There’s also a question as to where co-living as a concept has been acceptable and where it’s not acceptable. It’s true to say that gradually I think within the context of London, London boroughs have become more willing to see co-living but I still think there are some that are, are not pro co-living as a typology. That was the same with Build to Rent when it started, there was a natural reticence towards something that perhaps wasn’t understood and I think one of the things that’s held co-living back in the UK is that one person’s interpretation is very different to another’s and ours as always been you know we have brand standards that we stick to, we also bring along our track record for delivery so that if planning consents are being granted, we are going to deliver these buildings and I think it makes a huge difference when you go into a planning position that, be it the Corporation of London or Southwark or Hackney or wherever, they know that this building is going to get delivered by HUB and I think that’s absolutely key to taking projects through difficult planning situations.
Susan Freeman
And with the co-living, I mean is it, is just that they’re very small bedrooms and larger, shared amenities? How, how does it work?
Robert Sloss
I think that is a question that is asked time and time again. For us, we have minimum room sizes of 23 square metres. Some would say that’s not big but I think it’s significantly larger than some that we see are sort of 15/16 square metres. We spend a lot of time working on the shared amenity, primarily we focus on co-working and health and wellbeing, those are the two key amenities that we think we need to get right in our buildings. There are, shall we say, lesser amenities that we provide but the first two are absolutely key and I think that if you take our concept of a building, you also need to put it in the right place so, if we look at the Barbican, you have all that cultural enrichment around the Barbican, you have great transport, you have great sophistication around it. That element that is outside the building, is as important as all the stuff you put inside the building so the two have to go hand in hand.
Susan Freeman
And do you think, I mean, the reason it’s obviously taken a long time to get co-living accepted in Central London, is it because the planners associate it with bedsits and they, they don’t consider it to be a good thing?
Robert Sloss
I’m sure there’s an element of that and I’m sure there’s an element of people saying, “Oh you just want to put people in small spaces and get more people into buildings”. I think to an extent you’re always going to come up against that in co-live. My response to that is I don’t expect anybody to live in a co-living building all their lives, just as I don’t expect people necessarily to live in BTR all their lives. What I do think is in the right place, it serves a very valuable purpose in shall we say the stepping stone of different living solutions and if you get these schemes in the right place, I’m absolutely certain there will be strong demand for them. I think the other thing that cannot be forgotten in co-living is people coming in to a big city, London’s a big city, where shall I live, well I don’t really know many areas, I don’t know many people, with co-living in the right locations, you’re very centrally located, you’ve got the transport, you’ve got the amenity and you have an almost immediate community of people to get to know, make some friends, help navigate yourself around the city. I think that element of it and that interaction is, is a huge plus of living in this kind of development over and above, shall we say, Build to Rent where yes, there is social interaction but it will not be anywhere near as strong as it is in co-living.
Susan Freeman
Interesting, so it’s sort of co-living is somewhere between Build to Rent perhaps and a hotel because it sort of combines certain elements, doesn’t it?
Robert Sloss
100% does and there are differences between aparthotels and co-living. Co-living is more curated than aparthotels but a lot of these living solutions are, they have similarities but they also often service a slightly different clientele and I think in a big city like London, there is abundant need for all of these typologies.
Susan Freeman
And would you put them together or you separate them out?
Robert Sloss
I think it’s perfectly possible to build co-living and BTR together but what I would, what HUB would do if we, if we were building the two together is, there’s a clear pricing differential between mainstream BTR and co-living. With all our schemes, we price at 10-15% discount to regular BTR and co-live and the two can sit side by side and meet different budgets quite happily without cannibalising each other. So, yes.
Susan Freeman
And have you looked at the later living rental element?
Robert Sloss
It always looks like the Promised Land in UK real estate, the demographics are incredibly strong. I think for us it’s at the moment too much of a, a step into a different market that I don’t think HUB fully understands and I think it’s important to be confident in what you can do but also accepting the things you don’t know and necessarily can’t do. I wouldn’t say we’ll never do it but I think it’s a big departure from what we do now.
Susan Freeman
Okay. Let’s talk a little bit about the things that have happened recently so, you have recently acquired 42 Southwark Bridge Road with Bridges Fund Management and as I understand it, the plan is to repurpose this office building into a living scheme and I just wondered why this location and what sort of people do you envisage living there?
Robert Sloss
So, I am a self-confessed huge fan of Southwark, I just think it’s a really exciting part of London. I like the fact that it’s mixed use and there are lots of different things going on there and I think if you are working in Southwark or you’re working in the City, because we are what 150 metres from the Thames, what a great place to live, walk over the bridge to work, walk east to Borough Market, restaurants, theatres, it’s got everything around it to make it a very exciting place to live. So, I think the, the location speaks for itself. The other thing I would say is that we’re working on an affordable housing solution for key workers and I think if you can beat both of those markets in this location, I think it makes a really interesting long term asset that has, shall we say, a value over and above a financial value that everybody understands that the need to service London, you know, where is key worker accommodation, there’s such a shortage of, if we can match both of those evident needs, I think that is a very, very good solution.
Susan Freeman
Where would the, are the doctors and nurses live now in, in the absence of like suitable accommodation? Are they having to commute?
Robert Sloss
People are commuting, aren’t they from often long distances. Again, if you think about proximity to work for people who are working long hours, be they in the public sector, not necessarily in the private sector in the supposedly more expensive jobs, the ability to walk 10/15 minutes down the road and catch some rest and some peace, I think is, is very attractive.
Susan Freeman
No, it does make a lot of, a lot of sense, doesn’t it. One of the things that has sort of come up quite a lot just talking to developers who, who are looking at office to resi conversions is you know the problem of getting the numbers to work. You’ve obviously you know found a way to do that.
Robert Sloss
I think that a lot of people perhaps three/four years ago thought that there would, every office building could be converted and there was going to be mass conversion of office buildings into living uses. For a number of reasons, it’s just not possible. Looking at historic structures and trying to make them work with modern building standards, safety standards, is very difficult. You inevitably end up having to rework the frame of your building quite hard and it’s simply the case that for a lot of office buildings, they just don’t lend themselves to living uses and so that has limited the number of conversions that have come forward. There’s also various other physical issues, depths of floor plates, office floor plates and actually deep living floor plates ideally are narrow from light perspective, floor to ceiling heights of existing buildings, once you start weeding out those buildings the number of suitable conversions reduces. And I think also if you look at where London boroughs will accept change of use of offices, particularly in the City, there’s an understandable desire to maintain the core of the City as a workplace so you can’t just wonder along in the City and say “ooh, you know, I fancy a change of use in Bishopsgate”, there’ll be no chance of that so you have to look at where a possible change of use would be acceptable and that again limits the number of buildings that can be converted. So I would say generally there has been less office conversion than people have anticipated and we’re fortunate we have three around the City. We have looked at several hundred and only three have really worked for us and so I wouldn’t say it’s needle in a haystack but it is few and far between where these projects really do come together.
Susan Freeman
That’s so interesting actually that you mention the stats that you’re having to look at so many buildings before you find something that actually works. I mean one of the things that was noticeable when I was in New York last year with Opportunity London was there’s a huge amount of office to resi conversion there, which seems to have been going on for a little while but everybody talks about the grants that developers get to make the figures work. So, let’s move on to Maidenhead because I am intrigued by the Trehus, the timber office building that’s going to form part of the town centre regeneration there so I just wondered if you can tell us a little bit about Maidenhead and, and why a, why a timber building?
Robert Sloss
So, Maidenhead is, I can say without any apologies, is my favourite HUB project and there’s several reasons for that. We’ve had a great working relationship with our Norwegian partners, Smedvig, we’ve been working with them for eight years on the project. When we met at MIPIM, I talked about a lack of patient capital and regeneration and how valuable long-term partners are in regen in delivering true value in terms of how these town centres, city centres are going to operate in the future and it’s only with long-term patient capital that you can do that. Short-term, three/four year capital, it will lead to suboptimal decisions in terms of how you take these complex sites forward so, the relationship with Smedvig, the patient capital, has been great. The problems that we have solved along the way, I often say to people I could write a sort of development treaties about Maidenhead alone, it might be very interesting to a lot of people but things like we had to buy in nineteen different ownerships when we got involved in the site, we had to complete compulsory purchase order to conclude the ownerships, we had a whole planning consent that we actually went to committee with a recommendation for refusal. As everyone did, we got hit by Covid which offset the timing of the project but our patient capital was prepared to wait and what we all recognised was an excellent site, until the opportunity to forward fund all of the residential elements with Get Living came along and so bit by bit, we have solved problems. The forward funding deal with Get Living was transformatory, we established the development with the building of these four buildings and then we’ve been left with two other plots, both HUB and Smedvig are dedicated to completing the regen, to completing the legacy, the long-term value that we’re going to deliver to Maidenhead and the nose of the site was earmarked for an office building. It’s no secret to any of us that the Thames Valley office market has had a torrid five years and we were thinking we have to deliver this as part of the legacy, how do we create something that is unique and is going to stand out and those tenants that are looking to relocate will want to come to over and above the rest of the market so, we knew Waugh Thistleton pretty well, we recognised that this was a low rise building and so we just had a very loose idea about, you know, should we try and build this building out of cross-laminated timber to make it stand out, to make a better working environment, perhaps a more experiential office building. One thing’s for sure, the Thames Valley doesn’t need another boring office building, it needs more differentiation shall we say. So we put this to Smedvig and they said, “Yeah, we’ve been doing this in Norway for years, come and have a look at all the wooden buildings we’ve been building” so, there was a lot of luck in terms of meeting of minds and also the experience of Smedvig in timber office construction so we went to Norway and sort of built up a little bit of knowledge with them and then with Waugh Thistleton, started designing the office building. It’s also got quite a lot of stone in the façade so I mean if you look at the image, it actually looks more like a stone building than a wooden one but that is an important part of the environmental performance of the building, the low energy nature of it, the stone façade being designed to soak up more heat and reduce the running costs of the building. So bit by bit we pulled the design together, we felt that the chances in a very constrained market of getting a pre-let were virtually zero so we had to make a start and so four weeks ago, we started, not much is happening on site yet but the project’s under way, I think there’s been a lot of interest in the office market since we’ve been presenting it. I think it’s the only start in the Thames Valley this year so it’s stand out alone on that basis. Time will tell whether we had great vision or were foolhardy. Clearly, I think it’s going to be former, I think as we, I go through the development process, there will be an awful lot of interest. So much in our industry is you know seeing is believing and showing people CGI, you know everyone can do a CGI but actually showing a building under construction, showing the wood going into the building, the feel of it, I think there will be an awful lot of occupier interest as we go through.
Susan Freeman
Yes, it’s interesting. When the Office Group opened the Black and White Building in the City, I mean there was massive interest because I think it was the first timber office building in the City for an awfully long time and just going into the building, just smelling the wood, it just felt different but you’re, you almost, you need to sort of see it and feel it, don’t you.
Robert Sloss
100%. There are also various workforce studies that show greater productivity and greater mental welfare of people working in wooden buildings and I think the Black and White Building, you immediately felt that when you went inside it and I think it was, that was one of the things that really got us excited about trying to do this and trying to, always trying to differentiate away from the standard shall we say.
Susan Freeman
So, would you say that you like challenging standards?
Robert Sloss
I think if you look at the history of HUB and what, what we stand for, I think we do stand for challenging the norm for differentiating, I don’t think, when you’re a business like HUB, I don’t think anyone backs you for doing the same as everyone else, I think people back us for doing something that is perhaps hardly been done before, that has a different angle, be it the ultra-urban stuff, be it repurposing offices, be it cross-laminated timber office, I think that it’s that daring to be different that makes HUB interesting to our partners.
Susan Freeman
And that is quite an unusual commodity in real estate because obviously people worry about trying something new that might not go right and I was, as we were talking about it, I just wondered whether there’s anything you have tried and thought actually maybe not?
Robert Sloss
I think there’s lots of ideas that we have that perhaps never get outside of our office that for one reason or another, you know, don’t work or the timing’s not right. You know, you can do the right thing in development at the wrong time and the result is very poor financially, but also, I can remember fifteen years ago we developed a building in Portugal, timing was all wrong but if you go back now, it’s a fantastic building. We did the right thing at the wrong time so, you can look back and say okay we got that, you know got that wrong but you do need both timing and doing the right thing to make it all come together financially, nobody has 100% track record of success in everything they do.
Susan Freeman
No, and it’s not always the right thing to play it safe, is it? So, I was also wondering when we talked obviously about office to resi, but in Romford, you are looking at the shopping centres there and looking at I assume, possibly converting some of the retail into residential?
Robert Sloss
Yes, so, I would say that the problems we like solving the most are the regeneration problems because of the complexities, the conflicting forces that you have to try to meet to make things happen, the satisfaction of the long term change that you can create in town centres. We are on our way in Maidenhead, we’ve been successful in Croydon, successful in Wembley, successful in Leeds, in regenerating these often under loved areas. The next big challenge is Romford and I think it is a very significant challenge. We’re working with a Finnish partner in Romford, Redical. They bought the asset primarily for the shopping centre, the central mall is still successful but the secondary malls have been challenged for a long period of time. The Liberty is a very well known, I would say almost infamous asset known for its very high sales price fifteen odd years ago and the declining value up until Redical bought it so, undoubtedly not all of the retail is going to work in the future but some of it is definitely viable. An awful lot of people live in Romford, the Elizabeth Line is also very well connected across London and we approached Redical saying, “You may not see the value of creating a cohesive residential development strategy right now, but in time as the market changes, consented residential units here will be extremely valuable” and to their credit, they said, “Okay, we’ll give you six months to have a look at this and prove to us what you’re saying” and I’m pleased to say that we’re through those six months and we are now in the planning process for a master plan. I think that redeveloping shopping centres is exceedingly complex, clearly, you’re often developing around an active asset that adds complication and can add expense so that is a, another layer of difficulty that for example in Maidenhead we didn’t’ have because there was nothing operational and that’s a complexity. But what I would also say about retail assets with the right kind of living solution around them is that you will add an awful lot of value to the retail as well as the value add in the residential so it’s, it’s not merely a two-dimensional argument about here’s some flat, I think it’s a much more holistic argument about what does the whole value of the asset look like when you get to the end of this and how is this integrated asset going to, how are the different parts going to relate it to each other and how are they going to augment each other? And one of the things we’re going to be doing in Romford is a whole new entrance to the shopping centre that I think will have a massive lift on the asset. So it’s early days but I think it’s a very exciting project and I think we can make a huge difference there.
Susan Freeman
And presumably there are sort of different practical problems to converting shop units to residential from the problems you have converting office buildings to residential?
Robert Sloss
Yes, I would say if I look at Romford, we simply have to demolish some of the secondary malls. The shapes of the units, they’re deep, there’s no windows and so we will I think by reducing the amount of retail, less will be more on the retail.
Susan Freeman
Yeah and I think a lot of the shopping centre owners are, are sort of currently looking at how they can introduce residential into their, and around their, their schemes.
Robert Sloss
We have looked at a lot of shopping centre conversions. Interesting, a lot of the same constraints that you have in office conversion apply to shopping centres. Physical constraints, viability constraints, converting shopping centres is not an easy thing to do.
Susan Freeman
No, well, well we will watch your progress at Romford. And you also have some student up in Leith I believe, which looks, looks really interesting, it’s, you’re transforming a former gasworks, a naval yard into student accommodation. Sounds interesting.
Robert Sloss
Yes, so, Leith is probably the site with the greatest amount of provenance of any HUB site. When we looked into the history of it, the number of uses it had leading up to it becoming a Victorian gasworks was huge. There was even a rumour of a Viking longboat somewhere buried in the site which turns out, perhaps fortunately for the development, isn’t there, but the Victorian gasworks itself, absolutely fascinating, learning about the process, why the buildings that we’re keeping need to be protected for the heritage, clearly Edinburgh is a city with huge heritage, building heritage, but this site is quite unique in what it was so, there’s a whole cluster of Listed buildings that we’re protecting and are going to be adapted and used as student use. I think Leith is, Leith’s an area that has undergone huge change in the last fifteen/twenty years, certainly I think even ten years ago you probably wouldn’t have even considered a student development down in Leith but the advent of the extension of the city tram has, you know, oxygenated Leith and the waterfront and it’s very easy now to connect right to the centre of town. If you look at shall we say the out of lecture hall attractions of Edinburgh, I think Leith has got to be right up there in terms of nightlife, bars, general vibe so I think for a student location, it will prove to be very attractive once we’re complete. And also the ability to live in this sort of part new part, historic campus development, the tram runs right passed your front door, I think it’ll be great for people to study there.
Susan Freeman
It sounds brilliant. And why, why have you opted for student rather than some other form of, of living?
Robert Sloss
So, when we bought the site, it had a student consent. We went into it thinking is it student, is it potentially BTR? As soon as we bought the site, there was a lot of interest in the student side and we thought well, clearly the interest, the occupational interest, co-investment interest is telling us something here and so we did a lot of homework on PBSA and decided that in this instance, we should stick to that use. Edinburgh’s got a huge body of students, got a constant need for high quality PBSA, the, you know, planning environment for larger PBSA schemes is extremely difficult in Edinburgh so, we feel that in providing that, it will have a certain uniqueness in terms of its scale and the attractiveness of the campus layout. So for those reasons we felt we would stick to PBSA in Edinburgh, it’s a city we know very well, various members of our team live there and so, it made sense to do it in this instance.
Susan Freeman
And when you, you build or convert buildings for you know, for these different types of living, do you operate them yourselves or do you hand them over to somebody else to operate?
Robert Sloss
So, historically we’ve always tended to forward fund with institutional partners and they have had their own operations and we’ve passed the operations, we’ve passed the building over on PC, practical completion, and they have run the lease up of those assets. We recognise increasingly that HUB needs to offer some sort of asset management service to our partners, investors, increasingly the way in which living space assets are being funded requires the developer and the developer’s partner to have an active role in the lease up in the management of an asset to, to stabilisation and a possible revaluation or exit. So the first asset management role that we have is actually in the 45.59 the lease development so we are going to have a role in that in the lease up and we have in the last week appointed a new head of asset management for HUB, so the asset management side now exists and is something that we intend to grow and I think, I think we have to grow it, it’s not just a, you know, ‘would like to’, I think it’s absolutely necessary that as HUB continues to develop that we are able to talk to our partners on, on all sides of the capital spectrum but to reassure them that when we actually complete these assets, we know how to run them, how to lease them and know how to stabilise them.
Susan Freeman
Well that, yeah, that makes a lot of sense. And hearing you talk about regeneration and, and, and all these schemes, it just makes me wonder why developers aren’t appreciated more by the general public and I just, I just wondered if you had any thoughts on that?
Robert Sloss
Well, Susan, I think you’ve, you’ve touched on probably my pet subject.
Susan Freeman
So late in the conversation.
Robert Sloss
Ha, well, you know, people would say I’d say this, but I, I think development is an incredibly misunderstood profession. People’s perception is that it’s, it’s fly by night, it’s easy, everybody makes a fortune, build any old bit of crap and botch it and scarper, you know, not my problem and development is completely different to the public’s perception and I think it’s enormously frustrating, I think as an industry we don’t work in a coordinated enough way to sell to the greater public how valuable development and developers are and I think that greater understanding of the complexities, how interesting development is as a career, I think is something that the industry desperately needs and I think constantly as to how HUB can always work to not only talk about what we do but talk to people about how valuable development is and how it’s a career that people should look at, you know, yes you can make money in development, you can also spectacularly lose money, but I think it requires the best people of our profession, the best intellects, the most driven people with a very broad skill base and we, we need to be encouraging those people into our industry to make sure that the huge amount of development that this country needs is done to the best possible standard. Whether I think we’ll ever impact the wider public’s perception of developers, I’m not so sure, but there’s no harm in trying.
Susan Freeman
No, I mean unfortunately it’s always the negative that the Press seem to fixate on rather than the successes.
Robert Sloss
Yes, I think that’s so true, but papers are sold on bad news, not good news.
Susan Freeman
Could be true. So, with all these schemes going on, do you actually have any downtime and how do you spend it?
Robert Sloss
We all need downtime, we all need holidays to recover, refresh. I’m going on holiday at the end of next week, so I am getting some downtime. I don’t know, if I look at the team, we all have our various distractions that, we’ve a lot of kids in our team, seem to be very fertile, and I think as a culture we’re very well set up for people to have family time, we’re flexible about when people leave the office and I think that’s absolutely essential in keeping highly skilled, highly driven workforce together in the long run which again is key to development, it’s that longevity of high quality people working together, it’s absolutely key so, you know, I go fly fishing a lot when I’m not working, I love travelling so, there’s never a shortage of things to do when we’re not at the tiller at HUB.
Susan Freeman
You know, I wondered about the fishing because I looked at Instagram and are you the same, are you the same Robert Sloss that’s Chairman of the North Atlantic Salmon Fund?
Robert Sloss
Yes, I am. For my sins. Yes. So, that’s a charity that’s dedicated to trying to preserve wild salmon stocks in British rivers. They are 10% of what they were fifty years ago, there’s a massive crisis in our salmon and seatrout populations and we exist to trying to halt that decline and hopefully in time to turn it around and repopulate our rivers. Something I’m very passionate about.
Susan Freeman
Yeah, that’s something that sounds as it if it also requires a lot of attention. So, Robert, that’s been great, I mean there’s so many other things we could talk about but I think we’ve run out of time so, thank you very much.
Robert Sloss
Not at all. Really enjoyed it, thanks Susan, thanks so much for having me.
Susan Freeman
Thank you so much Robert for some great insights into what’s happening in the UK living sector and the skills needed to make urban regeneration work well.
So that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast coming very soon.
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