We Will Build More Rentals Because Market Wants That
- Feb 05, 2009
John Hitchcox (pictured) is the chairman of yoo, an international branding, design and investment property company he founded with Philippe Starck. Yoo currently has 57 projects under development. The company recently announced it decision to shift its focus from condos to rentals. Hitchcox talks to MHN Online News Editor Anuradha Kher about this change, how it will be implemented and what yoo will offer renters that isn’t already offered.MHN: Why the change in focus? Hitchcox: I believe rentals have not been given much attention. It is a slightly neglected side of residential construction, especially in the U.K. It is like the poor cousin of condos. I have always been keen on the rental business because it is another service/product we can provide to our customers. Of course, this move is driven by the opportunity created by a weakening economy, drop in demand for for-sale housing and an increase in demand for rentals.MHN: What kind of opportunity has the economy created?Hitchcox: People are less secure about housing due to the economy. They don’t want to be stuck with mortgage payments and are looking for something flexible. MHN: Will all of yoo’s buildings now be rentals? What percentage will be rentals?Hitchcox: Certainly not. Of the 30 new buildings we have opening in 2009 around the world, about 20-25 percent will be rentals. Of our total residential portfolio, we aim for approximately 30-35 percent to be rentals. There will be some buildings, which will be a combination of condos and apartments. Previously, nearly 85 percent of all our portfolio consisted of condos.MHN: What are renters looking for that isn’t already in the market?Hitchcox: With Dwell95, our project in New York, we realized that many people are looking for condo-like living with a high-design, hotel atmosphere, so we decided it was time to expand our reach and move more aggressively into the rental market. Dwell95 will be the prototype for our rental properties as we will incorporate yoo’s signature design elements into every building. We will also provide optional furniture packs with the units.MHN: According to several forecasts, the rental market will be in bad shape in 2009 but the for-sale market is expected to pick up. So why is yoo getting into rentals at this time?Hitchcox: This is a difficult market to forecast. We have some economists forecasting for us who have thrown their hands up. Due to the shortage of credit, there has been an increase in the number of people wanting to rent but simultaneously the supply of rentals has also gone up due to the shadow rental market, so there has certainly been some softening of rents. Having said that, in most countries there is still a shortage of quality housing and it all depends on how the demand and supply will flow.MHN: How will the partnerships with residential rental developers around the world work?Hitchcox: We will invest in some properties and some we will get a fee for. MHN: What’s in yoo’s pipeline for 2009?Hitchcox: Some of our projects are on hold, some have slowed down and others have taken off. It’s not as dire a situation as the press makes it out to be. But it will be quiet in the U.S. in 2009. We have a couple [of projects] in the works, but nothing confirmed.