This time last year, everyone wanted to know what was going on at the £324m Athlete’s Village. From Usain Bolt’s selfie of him cosying up with two (female) Swedish athletes, to the German discus thrower who forgot his security pass and spent the night kipping outside; the stadium might have provided the gold medals – but the focus of Games-related gossip and intrigue was the athletes’ accommodation.
Now the Athletes’ Village is about to become the centre of media attention again. The 17,000 tiny rooms that housed athletes over the four weeks of London 2012 have begun their transformation into the 2,800 flats and townhouses that will make up East Village, London’s largest new residential development. When the doors open in August and residents begin moving in, East Village will be the first major ‘commercial product’ to come out of the Olympic Park.
Former Ernst & Young partner Derek Gorman is the man with the unenviable task of making sure the Olympics’ legacy doesn’t go up in flames. Gorman has been put in charge of Get Living London, the private-sector company formed to manage East Village.
Gorman’s job won’t be an easy one: he may have a background in property (he helped to engineer the sale of Battersea Power Station), but his role involves a lot of PR, dispelling critics who say the Games have done nothing to help the local area.
But he hopes East Village’s inventive business model – more on which later – can prove the naysayers wrong. If he can keep government involvement to a minimum, that is.
There’s a lot riding on this: the first tourists won’t climb the ArcelorMittal Orbit until April next year, while West Ham won’t move into its new stadium until 2016. East Village is, for the time being, the Olympics’ only torch bearer (pun definitely intended).
It doesn’t help that there have already been criticisms that, although the Olympics is said to have driven £9.9bn of business to the UK economy (conveniently, given the Games themselves are estimated to have cost £8.9bn to stage), it did little to benefit locals.
MT’s interview last week with local business owner Lance Forman is a case in point: ‘How can you regenerate an area by building a Disneyland-style bubble in it and not letting people get out and explore the area?’ he asked. ‘They may as well have built the Olympic Park on the moon.’
But Gorman is emphatic that East Village will change all that. For a start, almost half the apartments (1,379 of them, to be run by Triathlon Homes, a separate company to Get Living London) come under the umbrella of ‘affordable’ housing, easing pressure on Newham’s 32,000-strong social housing waiting list.
Secondly, Get Living London (and Qatari Diar Delancey, the joint venture behind it) is tapping into one of property’s hottest trends: the 1,439 homes under its control won’t be sold – they’ll be rented out.
Admittedly, renting out homes might not sound revolutionary, but as the rising cost of buying a home prices young people out of the market, in the UK blocks of rented homes are becoming increasingly popular as a long-term investment.
Big pension funds, such as Aviva and Legal & General, are sniffing around the sector. In January, M&G investments ploughed £125m into the sector, buying 401 apartments in Stratford, just outside the Olympic Park, which it then leased back to housing association Genesis to rent out.
The rented homes currently comprise 17.4% of all households, according to stats from the government – up from 12.7% in 2007. No wonder big business wants a slice of the action.
But the rental sector in the UK is overwhelmingly a ‘mum and dad’ business. Fewer than 1% of landlords own more than 10 properties. In that respect, East Village isn’t just a business: it’s a social experiment.
‘And a logistical one,’ points out Gorman. ‘It’ll take 18 months to move people in. We couldn’t really have 1,400 vans all trying to move people in on the first day.’
As one of the UK’s first large-scale experiments in rented housing, Gorman saw an opportunity to change how the sector works, so the company carried out market research into how people see the sector.
‘We looked into what people hate, and the number one is fees – so we have decided not to charge fees,’ he says. That means no contract fees, no inventory fees, no fees for additional copies of the contract. For tenants, that could mean a saving of hundreds – even thousands – of pounds.
The other ‘inventive management practice’ Get Living London has introduced is long-term contracts. One of tenants’ main complaints about rented accommodation is its lack of stability – ‘they think the landlord is going to throw them out’, says Gorman.
Under East Village’s rules, tenants can sign a contract lasting up to five years, with the option of giving two months’ notice after six months. Tenants will be able to log everything from repair requests to noise complaints on an intranet. The idea is that as the management company is based onsite, it’ll be able to deal with the requests swiftly. If nothing is fixed, they only need to pop downstairs to complain.
‘We’re not an absentee landlord who’s in Hong Kong,’ points out Gorman. ‘We’re there, onsite. It’s a different way of doing things.’
Alas – while GLL is pioneering innovative ways to manage properties, it still has the albatross of government hanging around its neck.
The discourse at the time of the Games was around the importance of the private sector taking the lead on the legacy. But at a press conference in May, Denis Hone, chief executive of the London Legacy Development Corporation, said the body’s involvement in the Olympic site and the businesses that come out of it would stretch for at least 10 years.
To be fair, it was supposed to be 20: ’20 years was deemed to be the optimum build-out time, but there are loads of variables,’ Hone said at the press conference.
So it’s depressingly predictable that Gorman and his team still ‘regularly sit down’ with the LLDC.
‘The LLDC has a lot of plans,’ he admits.
There will also be the inevitable accusations that despite East Village’s social housing provision, it’s just another part of the ‘Disneyland Bubble’. Gorman is keen to point out the importance of Stratford’s transport connections – but surely that will just ferry residents away from contributing to Stratford’s local economy?
‘We’re not just focused on the local area, we’re focusing on London as a whole,’ says Gorman.
Nevertheless, it feels brave for London 2012’s first real-world business to be so experimental. From the decision to hold the Games in a forgotten part of the East End to the eye-popping opening ceremony, the Olympics themselves were proof of what can happen when governments take risks.
Done right, East Village can be a continuation of that. Done wrong, and it risks giving critics a lot more to talk about.