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  • Writer's pictureAnna Clare Harper

Retail, real estate and Build to Rent

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Anna had the chance to chat with Katherine Russell, Director of Build to Rent at the John Lewis Partnership about retail, real estate and Build to Rent.

Topics included:

  • The journey that the John Lewis Partnership - better known for homewares than housing - has been on with real estate generally, and residential property specifically, from owning ‘tops above shops’ to Build to Rent

  • Lessons learned through John Lewis’s Real Estate Portfolio, the New West End Company’s (a partnership of 600 West End-based businesses) Advisory Board and Dolphin Living (an independent charity with an endowment of £120m to provide affordable homes for Londoners)

  • What next for Build to Rent and the UK Private Rental Sector

Listen in here:

This transcript is AI generated. Please excuse any typos. If you’d like to see a human-edited version, please reach out to

[Anna Clare Harper]

Hi and welcome to the Return Property and Investment Podcast. I'm Anna and I'm delighted to be joined by Katherine Russell, who is Head of Build to Rent at John Lewis Partnership. She's also on the New West End Company Board, where she chairs their Sustainability Committee, and is an advisor to Dolphin Living's Asset and Development Committee, which is part of an independent charity with an endowment of £120 million to provide more affordable homes for Londoners.


So welcome to the podcast, Katherine, and thank you so much for joining me. Hello, nice to be here. So starting off, John Lewis is better known for homewares really than for housing.


I wondered if you could share an overview of the journey that you have been on with residential at John Lewis.


[Katherine Russell]

Yeah, so I've been with the partnership for just coming up for 16 years. Actually, my journey starts not in residential at all, really. I'm a bit of a newbie to the market.


I have a background in mixed use real estate. So I started life out in very small property consultants, learning the tricks of the trade, etc. And then, as I say, came over to the partnership around 16 years ago and did property management, asset management.


But I suppose more pertinent to this conversation of how I got into residential was I headed up the real estate portfolio for the group. And what that gave me was a remit to look at how do we utilize what is a vast real estate portfolio ranging from farms, clubs, hotels, logistics, grocery stores, department stores, you name it, we've got it. But a lot of it was underutilized but really well located.


So I started my journey actually looking at producing and creating a business around co-working for various reasons. And some might say lucky escape, that didn't come to fruition. But then started to look at the build to rent market, which was actually just emerging.


And this was probably around five years ago. And started looking at it from primarily an opco perspective in terms of we've got a really great brand with the partnership in terms of known for its trust, loyalty, quality, service, and recognize that actually in the residential market, particularly the rental market, those were some of the things that were lacking in the market in terms of what residents were saying. So we thought actually we could lend our assets in terms of our approach to the operation side really well.


But unfortunately, the margins are very high in that sort of business. So then looked at creating a business model that sees us develop, operate, and invest, which actually brings the business model into a vertically integrated one where we take on the development risk, planning risk. We did a partnership with Aberdeen who fund it for us.


And then once it's PC'd, we take on the operational management of it and then also take a investment stake at the end. And I think what's really interesting about the residential market at the moment is just chronically undersupplied and there's a huge amount of demand. And so I think the market is a really, really interesting one and one that you can not only hopefully make commercial impact on but also a social impact one as well.


[Anna Clare Harper]

I think that's really, really helpful background and super interesting to hear about what John Lewis has, basically the resources at your disposal. And one of the themes that comes up quite a lot in this podcast is ESG considerations and social impact in relation to real estate. I wondered if you can talk me through what you've learned through both the board work and your experience at John Lewis about how ESG and impact strategies and practices work for corporates and communities and what works.


[Katherine Russell]

Yeah. So I think just stepping back a minute, the property I view as just a facilitator to making people's lives different, improving them, etc. And ESG kind of circulates all of that.


And I think when it comes to whatever you're doing, whether it's residential, whether it's mixed use development, anything that regards people and place, you have to have a real consideration around how it impacts both the people that live there, the people that visit there, and the people that are in the surrounding area. And that's really important when you're thinking about design, when you're thinking about how it's operated on a day to day use, and not just in day use, but into the future as well. And I think it's thinking about some of the real interesting opportunities that you've got with what's already there.


So if I think about some of the schemes that we're looking at the moment, we're looking at how do we bring innovation, design and opportunities into what we've got. So the best example is at Waitrose West Ealing. As we look to redevelop the scheme itself, it will have a Waitrose at the bottom with residential on top, and it's all fully integrated.


It's thought about it from every user experience from as I described earlier, the surrounding community in which it sits, it's thought about people that are going to live there, it's thought about people that are going to visit them, people that are going to work there, etc. But really interesting technology that we are developing there is thinking about using the energy that comes from the Waitrose itself and how it's recycled back into the residential. So really interesting, innovative approach there.


I think the other thing is around green and open space. So really important to make sure particularly in urban environments where there isn't typically a lot of open green space, thinking about how is that integrated into the developments. And again, West Ealing, we've got I think it's over 30,000 square feet of open space, which is the equivalent of 11 tennis courts.


So there's just thinking about how people want to use and live and operate in the space. And as I kind of described, I think it's regardless of whether it's residential or mixed use. When I think about my experience on the NWEP board, it's really thinking about what makes a place in a community thrive.


And it is a multiple uses from retail, hospitality, office, residential. It takes a number of things to make a community really thrive and think about it for the longevity. And then the other aspect I suppose I'll probably bring back to the residential side of things is thinking about the types of materials and sources that we use to make sure that actually it's able to stand the test of time.


[Anna Clare Harper]

So those would probably be the three things I would call in. That's quite a lot. We've covered a huge amount of ground there.


So I just want to pick up on two points that you made. Firstly, I wondered if you can just talk through how you're reusing energy from the Waitrose in West Ealing. That sounds super interesting.


I'd love to know more about what you're doing there and how it works. Yeah.


[Katherine Russell]

So it's quite a technical innovation, actually. And it's basically described as ambient heat loops, which essentially takes the energy that is created from the refrigeration primarily in the Waitrose store. And that is recycled back up into the residential above.


[Anna Clare Harper]

Oh, wow.


[Katherine Russell]

Yeah. So it won't be right for every scheme. I think it's just thinking about how do you utilize the assets that you've got within your control for the greater good?


[Anna Clare Harper]

Oh, super interesting. And then the other follow-on question I had was just, can you just talk about NWEX for a second? Because I don't think everyone will know.


I mean, we talked about, I mentioned it's the new West End company. But I don't think everyone will know what that is. Can you just explain what the purpose of that and your vision there is?


[Katherine Russell]

So they represent primarily the occupiers of the Oxford Street district. And they're essentially a lobby and a voice bringing all of those occupiers together and lobbying for what is really important for them. And ultimately, it's all about making Oxford Street and the district that surrounds it the most successful and thriving shopping district possible.


And as I kind of described, it's not just focused on retail. The things that make Oxford Street and the Oxford Street district a success is a multiple consideration of uses across the district. So we think about things like business rates, what are all the things that impact people's, the businesses that operate there and their ability to succeed.


So business rates, we talk about things like pedestrianization. Safety is a massive issue within and across London. So making sure that we're hearing what's happening and how we can help support that.


And ultimately, it's understanding how is trade going and what are the things that we can do to help support occupiers to succeed. Because ultimately, London is a hugely successful location and district and we should be attracting lots of investment into London, both resident, a consumer and investor perspective.


[Anna Clare Harper]

Yeah. That's super interesting. Okay.


Great. Thank you for indulging me in those detailed questions. So what are some of the key lessons that you've learned through the ventures that you've been involved with in residential property, perhaps specifically, both at John Lewis and in the boards?


And I wondered if there's any kind of surprise discoveries or challenges that stood out in that journey of discovery?


[Katherine Russell]

I would say the partnerships is really, really important and alignment. So I spent a year trying to find our partner to come alongside us with our first three schemes on the residential side. And because John Lewis is a very social purpose-led business, you know, we're not a charity, we are a commercially run business.


So it's finding the right balance between those things, which is really, really challenging and difficult. And finding a partner that has those same aspirations and same purpose is actually quite challenging. And it's not until the rubber hits the road, as it were, until you actually really start to test whether you are truly aligned.


And I say actually, I'm really pleased with how some of those tests have come out with our relationship with Aberdeen, because it's proven that actually we are truly aligned. But I think it's really, really important that you put the effort up front in making sure actually the things that are important to you beyond the commercials are aligned. I think so partnerships is definitely the one thing that I would call out.


The second is just understanding what is it your end goal is. It's all well and good trying to develop an underutilized asset. You know, we all know it's for the greater good in terms of particularly when you think about residential, there's a chronic lack of supply, over demand, etc.


But thinking about in the long term, what impact do you really, really want to have, and making sure that everything in terms of design or approach to planning or approach to investment is again, all aligned towards that. So I think the kind of theme that I'm coming out with, in terms of partnerships, in terms of the end impact is all got to be centred around alignment. And then the third aspect, I would say it's all about relationships.


That's really, really critical, as well in terms of forming the right relationships in the market, forming the right relationships with the community, and also the team that's delivering it all as well.


[Anna Clare Harper]

Oh my goodness, this is so interesting. And it's so highly relevant for me at the moment, actually. So I was talking before we started recording about what we're working on.


And it's exactly the same, right? Everything that is kind of defining the success of Green Mercy, my business is all about partnerships and relationships and alignment. And if we can't find that, you know, then it doesn't work.


But that's exactly the things that we're spending our time and energy on at the moment. And that I think is the only way that we I completely agree with you. The only way that we can possibly hope to start to resolve the shortage of quality, locally affordable housing is through working together.


There is no one winner in this. It has to be a collaboration. Completely agree.


So looking ahead, what do you see as the future trends or direction for Build to Rent? And are there any particular areas or strategies that you're excited about?


[Katherine Russell]

So I think it's a really, really exciting space. And I wouldn't just look at it in terms of multifamily or Build to Rent singly. I think it's what's going to happen in the kind of rental market at large.


Because if I look at what's been happening in the pastel market, and unfortunately, I can see some similar trends happening in the rental market as well in terms of actually affordability. People are definitely staying and having to stay longer in rental accommodation than they ever intended. And so it's kind of the middle squeeze.


People were going into rental accommodation thinking that they'll be there for a couple of years, but actually end up staying longer, getting married, having their families, etc. And I think that just paves a whole new way of looking at the rental sector and how it's viewed from an investment perspective, but also how it's viewed from a kind of societal perspective as well. There's always been this trend that actually you should buy your home.


That's kind of the end goal in the UK. But actually, if you look across Europe and others, actually owning your own home isn't the end goal. A lot of people rent.


It's the common way of living. And I think over time, that is increasingly going to be the case in the UK. It might not completely overtake the for sale market.


I doubt that very much. But I think it will definitely have a much more solidified percentage of the market, which paves the way for a lot more creative and innovative ideas around how we deliver housing. So I think there's a real common trend emerging across single family, co-living, a whole host of things, and actually also at the other end of the spectrum as well around senior living as well.


So loads of opportunity. I think, as we were just talking about a minute ago, I think the ability to deliver all of this is going to come back to some really creative and innovative partnerships. And thinking about the big landowners and where is the real need for housing as well?


If you look at the NHS, they've got a crucial, crucial need for housing. I think there's lots of opportunities that are still yet to be untapped.


[Anna Clare Harper]

Oh my goodness, me too. And I completely agree with what you're saying about, renting is a very good way of life if it's the right product and service. It's just that in our markets, historically, the private rental sector has been not professional and not well-priced compared to incomes.


And yeah, I really hope that over the coming years, there is a good mid-market offering that comes out and from improving existing supply, which is obviously more my focus. Okay, one more question, which I haven't read before. You've got a really interesting career path in this space.


I wonder if you have any nuggets of wisdom for others who are looking to build a career either in the corporate space in a company like John Lewis or in real estate?


[Katherine Russell]

Yeah, I mean, I think what's served me really well is a couple of things. One is opportunities. I've always had opportunities to, I suppose, diversify away from what I've originally been doing and I've never been afraid to not take them.


So I think anybody who is maybe down in one lane on the real estate path that has an opportunity to look at other things, I would 110% advocate that. I think the other thing is mentorship. So I've been really lucky to have some great mentors in my career.


And I'm hoping that I'm giving it back through some of the work I'm doing with Mentoring Circle and I've just gone on to the ULI Mentoring Programme as well. So I think it's a great way of bringing up the next generation, which I think is really, really important for the real estate market to have real diversity and for everyone to pass down their knowledge and experience. And I've found through mentoring actually is it's really good from a reverse mentoring process as well.


I've learned a huge amount. So I definitely would advocate that. But I think on a personal level, I think I have always employed a growth mindset.


I've always been really interested and inquisitive around loads of things that are happening around me, either in a work context or a personal context. And I think if you are inquisitive and you've got that growth mindset, it opens so many doors and opportunities for you. So I think, yeah, employing that kind of mindset is really, really important.


And then just transparency and collaboration, really.


[Anna Clare Harper]

Oh, my goodness. Just a few really huge topics. Well, I'm glad we opened them up at the end.


That's really, really helpful. Thank you. And it's also, I mean, to your point about mentoring and being mentored, I completely agree with that.


There's so much you can learn from others, whether they are mentoring you or whether you're mentoring them. So it's a really nice note to end on, paying it forward. If listeners want to find more about you or John Lewis or any of the boards that you contribute to or get in touch, what's the best way for them to do that?


[Katherine Russell]

So by email or by LinkedIn. LinkedIn is probably the easiest opportunity and gets a direct contact to me.


[Anna Clare Harper]

Amazing. Fab. Well, thank you so much for joining me and thanks for listening.


Lovely. Bye.


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