Is co-living the future of housing?

At first glance, co-living might merely seem like an easier way for millennials to access lower cost housing, but it’s a lot more than that. In fact, even retirees are taking advantage of co-living spaces across the globe.

Over the past decade, the co-working trend has disrupted traditional approaches to buying and leasing office space. The rise of remote work has facilitated new ways of doing business and redefined what it means to be an employee. As a result, fresh business models and interesting new players have emerged in the arena of commercial real estate. Workspaces, however, are far from the only places facing disruption. Accommodation alternatives are rapidly emerging too.

The term “co-living” refers to residential real estate offerings with communal facilities and shared spaces that move the emphasis away from buying and renting homes. The focus is instead on individual or group access to attractive accommodation without the burden of ownership. These models aim to strike a balance between privacy and community, offering high standards of accommodation with added services to help residents achieve a better quality of life.

There has been a huge surge of interest in this area from those seeking urban housing options in the world’s most expensive cities. Co-living startup OpenDoor in San Francisco has quickly expanded to accommodate 65 residents across five properties, and it currently has a waiting list of more than 800 people. Here in London, The Collective has been making waves with its 546-room co-living venue set beside a canal in Willesden Junction.

While many of these projects are limited in scope, other operators are taking a more global approach built on a subscription model. The accommodation network Roam invites residents to sign up for a single lease that allows them to co-live in San Francisco, London, Bali, Miami and Tokyo for weeks or months at a time. Communal accommodation is far from a new idea, but rebranding it as “co-living” has resulted in an unexpected revival of the concept.

These new housing concepts address a number of issues that young urbanites face in global cities like London, San Francisco and New York. Fewer jobs now require employees to report to a single office each day as more companies adopt remote work practices. At the same time, the desire to be tied to a single home in one city for the long-term has also decreased. This is creating demand for new accommodation options and innovative services to accompany them.

In the future, paying rent to a single landlord in a single location is unlikely to be the standard arrangement. The mindset of millennials is different from previous generations and research shows that the aspiration for home-ownership has all but disappeared. As this demographic reaches their prime spending years, they present plenty of opportunities for disruptive companies and forward-thinking investors. It’s crucial to consider their priorities and to start work early on the products and services that will replace the norms set by their predecessors.

Addressing the need for affordability and quality is undoubtedly the biggest challenge for investors and startups to consider. An en-suite room at The Collective starts from a modest £250 per week including rent, council tax, utilities, room cleaning and access to communal spaces and events. Their model is high volume, low margin. A studio loft at the Zoku co-living complex in Amsterdam, however, comes in at around £1,100 per week when booked as part of a month’s stay, with similar inclusions as The Collective. With fewer rooms available, an average occupancy rate of around 90%, and a huge financial outlay spent on fitting out a building to meticulously-designed specs, their model is lower volume and higher margin, and builds out from a hotel and hospitality audience rather than a property rental audience.

At Roam, flexibility and mobility are key parts of the package. For an average cost of around £2,000 per month, residents can stay in any of the company’s locations. But there are questions over how much flexibility and mobility is necessary for consumers and viable in financial terms for operators. Co-working has already adopted a “home” model, allowing workers to be based primarily at a single location, with the flexibility to spend limited periods at other locations as needed. The same principle could certainly work in co-living, though nobody has found the winning formula yet.

More competition in the market may deliver greater affordability for consumers in the coming years, which could help address the housing crisis and assist cities in reducing the brain drain of young talent relocating to cheaper destinations. For this potential to be realised and more people to adopt co-living, reducing the price point will be a key battleground for operators.

In designing for the young professionals driving the trend, the key component is understanding what’s important and valuable to them as a demographic. Features like nearby gym access, on-site co-working areas and shared laundry facilities can help residents reduce their overall living costs — and aid companies in attracting more overall spend for additional services provided as part of a package. Compared to bricks and mortar alone, this requires a fundamental shift of mindset on the part of real estate players.

Co-living is a long-term investment game. The initial financial outlay is significant, but the potential gains of the subscription-style housing models that are emerging are significant too. A total re-envisioning of housing norms is just around the corner, and there’s a big opportunity for startups that can iron out the creases of first-mover operators or improve on their offerings for the residential real estate market.

Check out my related post: Why don’t millennials invest?

Interesting reads:

23 thoughts on “Is co-living the future of housing?

  1. Due to the fact how the rents are increasing every day, especially in the “western” Europe, and the chances to find an affordable flat, I think that more and more people will consider to live with other people, and share the expenses. So, the history repeats itself, and goes backwards, to the times when there were tens of people living under the same roof…

    Liked by 1 person

  2. Reblogged this on Libertas Nova and commented:
    …Modern world is changing, more and more every day, and we, as its ever growing human population having more social problems that we are getting hard to cope with them. One of those big problems, that are becoming more expressed by each new day, are the ones with accomodation issues. Even today, hundreds of thousands people are migrating all around of the word, and trying to settle in more developed world countries, primarily in the U.S. and “western” Europe, mostly in the big towns like New York, London, Tokyo, Berlin, Stockholm, Paris, Madrid etc., and with more people coming, there are less apartments and houses available for them, which means that those that are available have much bigger rental price, that is growing more and more each and every day (which I experienced myself while living in Munich, and now when I´m in Stockholm). Some of those accomodation and rental issues are explained in this well designed article, with some solutions how to solve this ongoing problem of today.

    Liked by 1 person

  3. Thoughtful, Brother, but you left out all of the people trying to exist on minimum wages, slave wage labor is what I call it. The Rich people must have a steady supply of “Consumers” to keep the $$$$$ flowing into their coffers, thus: Over-Population, Refugees fleeing from GREED, Human beings drowning in the Mediterranean Sea by the thousands, and few countries will allow them in……Soon, I think, they will begin to torpedo those boats, because GREED is an infectious deadly disease; it is destroying this planet, and the Future we should by right be leaving for our Children…..

    Liked by 1 person

      1. By Treating All Men, Women, & Children as equals we will create the “House of Mankind”, once that is done, a portion of this Universe will be opened to Us! We will get to Meet Our Neighbor’s! How wonderful is that?


  4. Co living arrangements were a hot topic when I was in my 20’s, and I’m 61 now. Obviously there are multiple advantages which I suspect you have considered in depth.
    Design of a communal space that allows privacy, but shared use of certain facilities such as laundry should be relatively simple however where it falls down when I looked at years ago, was finding people who bought into the idea. Also if a compatible couple leaves the nest so to speak and wants to move forward, how do the others prevent a noncompatible couple from joining in. The people selling their interest just want to move on, and don’t want any hindrances to that process.

    Liked by 2 people

  5. I have a very very basic question if I may? When you said: “The focus is instead on individual or group access to attractive accommodation without the burden of ownership”, may I ask how that plan would be put to motion in reality? What I mean is- either we pay to rent a space, or we pay the mortgage to own a place. Financially speaking, for an individual to opt for co-living, how would that arrangement be, if we don’t rent the communal space or own it in some way?
    On a separate note, I like the concept of co-living in different countries at the same time because that can bring forward an integrated approach that reduces a lot of the back and forth of finding a new place to live…
    Lastly, the article was a great read, so thank you for that! 🙂 To be honest, I’m not the best when it comes to economic discussion on any matter, but I am trying to come out of that by being part of the discussion. So thank you for starting it! 🙂

    Liked by 1 person

    1. nfa7, this note is a little late, since you wrote it on Nov. 2nd. and it is now Nov. 17,,,,, but you posed an interesting question…..Why is it always about the Money? What if we learned to treat all men,women, & children as equals? What if the Gold stored away in those vaults was discovered to be worthless? Gold cannot be eaten, it cannot generate Heat, a pound of Gold VS a pound of Coal, on a cold day which would you choose?

      Liked by 1 person

      1. That’s fine, a late response is not a problem at all..but wow, didn’t realise this before you mentioned it! The concept of money comes automatically when affordability comes into question, but other than that money does not define the value of the co-living. The value comes from the intangible right? I really liked your reference about gold and coal 🙂 Unless the gold gets me out of paying rent indefinitely, I would definitely have to choose coal!

        Liked by 1 person

  6. NFA 7 So you are an alert person to pick up^ on what I had to say about Gold and it’s uselessness……Destroying our one and only home for possession of it! I just turned off the news radio, mind numbing crap, over and over again, now my brain is free to respond to you…..Let us think of a livable paradise we hand down to our precious children, we will all be gone from this place, yet our children will inherit what? A strip-mined planet? When will the so-called Masters of the Universe realize that when they die they go out the way they came in naked, unclothed, possessing Nothing! One man has $100 billion + dollars in his account and does nothing good with it; what will be his reward when he faces judgement day? Yet this one man could cure homelessness all by his self! He stands Condemned!

    Liked by 2 people

  7. So you think that Mr. J. Bezo’s going to have a change of heart and gift his $$$$$away? After that divorce relieved him of 60 billion bucks? After all he only earns a billion bucks a month by what I consider stupid people clicking on Buy Now, filling those empty carts with useless junk to make their empty lives ever emptier, they who have lost the ability to think for themselves and are now the slaves of desire? Wage slaves for-ever….

    Liked by 1 person

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