How will co-living trends reshape real estate?
Archilogic helps office providers better understand and visualise their spaces through 3D floor plans, office design simulations and data analytics. Here we look at how office designers and workplace planners can take inspiration from the growing co-living trend in residential real-estate.
First came co-working, then came co-living – and some say this trend is the more transformative one. Your first thought may be, “Nothing new about houseshares,” but co-living is more than just roommates with an app ( sorry, Vox ). It’s a housing model that appeals to lonely retirees as well as digital nomads. It can cater to an appetite for luxury as well as low incomes, and that could even compete with co-working spaces.Evolving out of the combining streams of the sharing and gig economies , many co-living spaces explicitly target “digital nomads”. These are young creative or tech workers who choose to travel the world, working from a laptop on a series of projects rather than tying themselves to one home or one employer. By 2030, millennials will make up 75% of the workforce, and following current business trends, many of them can be expected to work remotely. These adventurers may not need a desk (the coffee shop will do just as well) but they do need a place to sleep. And that’s where co-living comes in.Just as WeWork sprang up to give freelancers and small businesses a collaborative, energizing workplace without the long-term commitment, co-living providers (including WeWork’s housing division, WeLive) offer flexible, short-term leases, spaces with varying levels of privacy. You get your own bedroom and usually a bathroom, but share kitchens, and everyone in the building can congregate in larger social spaces.
What makes co-living new?
The key differentiator, compared with traditional roommate arrangements, is that co-living landlords take the hassle out of housing. No need to sort out utilities or arrange a cleaning schedule, never mind finding roommates – that’s all part of the service. They’ll even handle conflicts between tenants.
But if you believe the evangelists, it goes beyond convenience. Just as co-working fans preach about synergy and collaboration, co-living providers and users swear the model contributes to personal and professional growth. There’s the obvious draw of being able to live and work around the world; some providers, such as Roam, have a loyalty program that makes it even easier to switch between sites. There’s also the attraction of living among like-minded souls with shared interests and values.
Despite the utopian language, though – “ intentional communities ” is one term that gets thrown around, calling to mind hippie communes of the past – this trend is firmly individualistic. Users may want a plug-and-play community , but they also want to be free to leave at a moment’s notice, and to skip the chores. That may be what makes co-living so well suited to a wide range of modern needs. Older tenants want the company, but they worry about having to deal with other people’s mess. Younger tenants are keen on networking but not so much on a long-term commitment. Co-living providers design their offerings to address all these concerns.
Not just for millennials
This may be a fringe movement but it’s booming , and has the potential to dramatically shape our cities and the real estate industry as we know it. Medici Living’s recent fundraising of €1 billion for its expansion into Europe shows the increasing clout of the co-living sector. And the success of its model – providing a broad range of spaces, from studios to five-bedroom units – shows that the appeal goes well beyond those digital nomads. Medici boasts 96% occupancy in its US locations.
Just as well. By 2050, the global population will include more than 2 billion over 60 ; an age group in which loneliness and isolation are common problems. The instant community of co-living could be the solution for these emotional problems, as well as for the challenge of affordability.
The business case for developers and landlords
Today, co-living is not cheap. There’s an assumption that users are looking to save money – but in most cases that doesn’t hold up. Units typically rent for similar rates to traditional apartments (and being typically located in tech hub cities with high housing demand, these rents are not low). On the other hand, they are fitted out to a high quality standard and offer more facilities (how about a gym or even a movie theater?), not to mention concierge services and those flexible leases. Tenants may not be saving money, but they’re getting more bang for their buck.And the landlords? Well, with more shared areas and smaller bedrooms, they’re squeezing more dollars out of each square foot. Tenants are looking to move fast and travel light, so they don’t need a lot of room for their stuff – just a high standard of comfort.All this makes co-living largely a luxury niche, dominated by the young and upwardly mobile. But providers insist that it’s not just for millennials. And as pressure on housing grows in cities around the world, demand will build for this style of living but at a more affordable price. In New York, the city has made financing available to co-living developments that include low-income units. Meanwhile, providers Common, Bungalow and others say they are in discussions with local and national governments about affordable housing solutions in their locations.
3D floor plans limit the impact of high occupancy turnover
Co-living may be the future, but for property managers, it’s not an easy model to manage. Nomadic tenants mean high turnover (although Common says most residents are on 12-month leases, the minimum stay for many is just a week). Yet landlords rely on high occupancy to cover the high service costs.At that rate, clearly, realtors can’t be showing tenants around in person. The instant-access housing model demands online viewings, using technology such as Archilogic’s 3D floor plans. The good news is, co-living’s target market is already used to researching home options and even making decisions online. Digital 2D floor plans also make it easy to update information, reflecting any changes to shared spaces and showing availability. And online viewings go far to filter out time-wasters, restricting in-person appointments to those with genuine interest.Today, co-living is bringing millennials closer to their inner-city workplaces and offering them the luxury of spontaneity. Tomorrow, it may well be reshaping cities with communal developments to suit all demographics. Residential property managers will need to be prepared for those demands – and the tools they’ll need to sell future living concepts can put them ahead of the curve today.