In A World Of Cost Uncertainty, Fixing Any Aspect Of BTR Management Is Essential

Labour, materials, service fees — almost all the cost elements of developing and managing a build-to-rent asset are on the rise. On top of this, many factors are making it hard to predict where costs will be in five years’ time, from the continuing impact of Brexit and the pandemic, to supply chain disruption and shortages.

Signing up for costs that can be set in stone or at least predicted is therefore only a good thing, said Jon Hammond, Quadient head of real estate parcel locker solution sales, UK and Ireland. One such cost is a parcel delivery solution, which can not only be a fixed cost but can solve a growing burden common across all residential property.

“Developers need to talk to investors about yield, so anything that can be a fixed cost for a certain number of years is a benefit,” he said. “On top of that, parcel management in a BTR scheme has become a real challenge for property teams to manage as volumes have increased exponentially. They need a solution that allows them to focus on creating the right experience for residents.”

Spiralling Costs

The cost of managing parcel deliveries came under the spotlight during national lockdowns. UK parcel volumes increased by almost 50% in 2020-21 compared to the previous year to reach 4.2 billion items, a result of everyone’s sudden reliance on online shopping. That’s about 78 parcels per adult each year — likely a higher number among the young people who typically live in a BTR scheme.

“Property owners and managers need to understand what’s happening with mail and parcel volumes,” Hammond said. “They’re not going to go back down post-pandemic. Volumes have plateaued a little but are still on an upward trajectory. We know that Generation Z and millennials shopped online before the pandemic, but now all generations shop online."

The impact on operational expenditure in a BTR scheme where parcels are handled manually is therefore significant, Hammond said. It takes on average four minutes to log, store, inform and distribute a parcel manually, according to Quadient’s research. In a 100-unit scheme, if a resident receives a parcel every four days, this adds up to 2.25 hours processing parcels. In a 400-unit scheme, that becomes a full-time job for a member of staff.  

“I spoke to one property manager in Ireland who said that during lockdown, parcel management grew from one person’s job to oversee, to a full-time job for two and a half people,” Hammond said. “When you include national insurance, pension and so on, the cost of salaries for those people was €120K a year. If the number of parcels your building receives increases from 2,000 to 4,000 a week in just a year, how can you factor that growth into costs?”

A Fixed Solution

Installing automatic parcel lockers can go a long way to reducing the impact of increased parcel deliveries on operational expenditure, Hammond said. A courier can deliver parcels directly into lockers, which residents then access via a unique code whenever they choose. This process cuts out the middleman — the facilities management team — entirely.

“With lockers, parcel management becomes a job of management overview rather than a manual process,” Hammond said. “This allows the building management teams to do the million other things they have to do to provide a good resident experience, from setting up a yoga studio to carrying out maintenance.”

Homeviews’ 2022 Build To Rent Report highlighted how a high rating for facilities correlates with a high rating for an overall BTR scheme, showing how important good management is. The usefulness of parcel delivery solutions was cited in 13% of resident reviews and the report detailed how “residents often referenced past problems with parcel deliveries and said that having the service made their lives easier”.

Installing parcel lockers not only reduces staff costs, replacing them with a fixed rental agreement or the initial cost of hardware and an ongoing software fee, Hammond said. It also reduces associated costs, such as the cost of a resident unhappy that their parcel has gone missing in the pile.

“Theft of parcels has become such a problem that it has hit the headlines in recent years,” Hammond said. “If a resident knows their parcel is safe until they collect it, the knock-on effect of happy tenants is reduced resident churn and even higher potential rental income.”

Against a background of economic and political turbulence, fixing any element of managing a property can be appealing. Whether speaking to a resident about how their delivery will be handled or an investor looking to create a financial model, Hammond said, certainty is key.

This article was produced in collaboration between Parcel Pending by Quadient and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.