JLL Residential

The problem with Space Standards

By Adam Challis, Head of Residential Research, JLL

In my first proper job, I had the opportunity to help organise a sales conference for a carpet manufacturer. We called it the 'Wall to Wall Conference'. Thankfully my stint as a marketeer was short lived.

I came across the same company many years later when analysing the purpose-built private rented sector in the United States. One investor/ landlord talked to me about the bedroom sizes, which were a specific width to fit a standard roll of carpet. Fewer cuts meant less wastage, faster turnaround between tenancies, and bluntly, contributed to more profitable buildings. The investor had thousands more homes planned, chock full of tiny tweaks to standard building practices that drove better returns.

I like this little anecdote in the context of Space Standards, because it reminds me of how far away they are from serving any commercial purpose. On a good day they represent a planning simplification of what would otherwise be quite complex issues of design quality. On a bad day, they represent a lazy proxy for design standards.
"Prospective purchasers knew where they wanted to be and would make concessions on other attributes of their wish list to get there. Turns out, unit size is less important than we think."
Adam Challis

Head of Residential Research, JLL

In conjunction with Pocket Living, JLL ran a research survey in 2015 to better understand what first-time buyers want. It turns out that space matters, but not that much.

Out in front, by some margin, was location. Prospective purchasers knew where they wanted to be and would make concessions on other attributes of their wish list to get there. Turns out, unit size is less important than we think.

It should be said here that Pocket Living delivers to minimum space standards, but by designing very clever and ergonomic homes, they are able to squeeze more value out of the space for future occupiers. That's good economy for the developer, but smaller units cost less, meaning they are affordable to a higher proportion of the population. By our calculations, in London that meant an extra 200,000 households.

The point is worth repeating; smaller units are more affordable to more people. And in the right location, that's what they want.

Said a different way, bigger most certainly isn't always better. I am also not convinced that a simplistic approach to space standards is relevant to the modern city dweller. Demographic changes are creating smaller household sizes. Later family formation, family breakup, and living longer (often alone) together mean that space requirements are changing. Let alone the housing affordability challenge, which is set only to worsen.

We are also seeing a shift towards shared spaces. Who needs a private dining room if one can be made available for all residents in a building on request. Business centres over a study, rooftop garden over a balcony; all provided at higher quality under a collective principle. Increasingly, shared spaces can replicate the same needs but do it better - and cheaper for occupiers.

Returning to purpose-built rental blocks (what JLL in the UK calls Private Rented Communities, or PRCs), cumbersome design standards can get in the way of greater building densities that improve the economics of this new asset class. There is all kinds of innovation in this space - pun intended - but space standards are undermining the economics of delivery in higher value locations. Quite simply, we will see fewer PRC buildings delivered in exactly the places where people want them to be.

To be clear, many investors in this new asset class will not engage with the space standards debate, fearing that a potential stigma of 'sub-standard' units would cast a long shadow over the sector as a whole. I get that, but at the same time this stance will undermine the huge opportunity that the sector offers to build more homes that people can afford to occupy in places and where our cities need them to be.

The space standards review should be looking holistically at the benefits as well as the shortcomings they bring, with due consideration for the economics of delivery and what the market really wants. A 'Wall to Wall' review - if you like.