JLL’s first PRS block management deal close, says Hogg
JLL is in advanced negotiations to agree its first private rented sector building management contract in Manchester as it establishes the new service offering in the city, according to senior director Stephen Hogg.
A newly created team is in place in Manchester, headed by Shannon Conway, director, alongside two other staff. The team will grow from three to 10 if the deal with an unnamed developer is agreed.
Hogg, lead director of the regional teams in residential advisory at JLL, said: “We already manage over 1,000 flats in Manchester anyway, for buy-to-let landlords from our residential branch on Deansgate. This new service means we will be able to take that further and manage the whole building, including cleaning contracts, lift contracts and so on.”
Hogg said that JLL’s scale as arguably the largest property advisor in the UK and Europe meant its buying power could be deployed to win more competitive contracts with suppliers than smaller independents.
Hogg declined to name the block being negotiated at the moment, other than saying 500 units would be managed under the first contract. He added: “We’re heavily involved in PRS already from advising developers on sourcing funding to devising letting strategies, giving investors and tenants that confidence that buildings will be managed well. We manage directly in the commercial sector – shopping centres and offices – we can transfer those skills to the residential sector. Our US business has extensive experience of PRS management on the East Coast of America and across Asia Pacific and we can tap into that knowledge and expertise now in the UK.”
JLL has already secured its first PRS block management contracts in London. Hogg compared prospects for the PRS market to the emerging student accommodation market 10 years ago. “In six years’ time people will be trading blocks between funds,” Hogg added.
In terms of the business model, residential block management does not enjoy the margins of transactional work such as investment agency, but is “non-cycle aligned”, according to Hogg. Secure income that can remain the same in a downturn makes for an attractive business plan in property. He did not rule out acquisition of local rivals if the right opportunity arose but said growth would be organic for now.
The first large PRS block in Manchester is due to complete in the coming months, Renaker’s at Greengate. Several developments are proposed in the sector by Renaker across the city. Others are predicted for Angel Meadows by the Co-operative and Hermes, St Johns by Allied London and New Victoria by Muse.