Is the Future Co-Living?
While researching the Co-living, Co-working, Long Stay and Student accommodation scene for a project, we realised that the overarching theme throughout this research seemed to be smaller, simply appointed and well designed rooms and engaging, community-spirited communal areas that appeal to an ‘experiences over possessions’ audience that are broadly, but not exclusively, millennials.
However, throughout the research we realised that many of the brands in this market are VERY similar and essentially re-packaging the same core product (sorry to be pessimistic here). This raised several questions that we think are worth discussing such as, how are different brands differentiating? and achieving their price-points? We of course realise the importance of the individual brands and the emotional connection they carry with the audience could prove to be the leading differentiator, but see other questions arising.
Bigger Questions Around Co-living
The broader context of this research is that today’s workforce is no longer aligned to the housing market that proliferates big cities. Is co-living the long term solution to this, or do genuine and lasting solutions to this problem exist elsewhere?
As part of our research into co-living, we looked at brands such as The Collective and Roam, plus other innovations such as Y:Cube and Fish Island Village, both in London; and how co-living may provide solutions to challenges in the retirement community space.
However, on a fundamental level, whilst dorms and communal kitchens may suit students and graduates down to the ground, we believe that in order to achieve a sizeable shift in behaviour and mass-market penetration, we need to think carefully about what co-living looks like on a medium to long terms basis as residents move through to settling down, marrying and having children. What are the medium to long terms effects of having such minimal personal space, favouring ‘communities’ and interaction over relaxation, time alone and dealing with the core societal, environmental and technological developments that many believe are challenging our ability to be happy?
A Disconnect Between Vision and Reality
Throughout this research a common theme emerged, centring on a polarisation of opinion when it comes to delivering on the objectives and aspirations of co-living.
At The Collective in north London, a tenant was quoted when talking about his experience, as saying that ‘at the end of the day, you’re stuck between a cupboard and a door”. Another said that “services and facilities are under used and [that] it’s always the same 50 – 60 people you see which means the community feel is missing. In the same article, the author wrote that “it’s not the case that everyone at the Collective sees the social upside of living here, with a handful of residents saying the majority of people aren’t interested in meeting anyone”.
Finally, another resident was quoted as saying “it’s not much more than a glorified student dorm”.
In contrast to this, innovators, operators and industry paints a very different picture of the opportunity, the sector and the potential for growth. Soho House founder Nick Jones, said of his interest in exploring opportunities in the sector that “for people that come out of university, people who are doing startups, accommodation can be incredibly expensive in London and if we can find places in non-expensive areas but do it in a certain style, in a certain sort of way, then we think there might be a good following for that”.
He went on to say that “This whole space where people want to work together rather than at the kitchen table or in the Starbucks or in Soho House; where they want to have a community, a communal work space. I think that is definitely moving over to living space as well”.
Residents of Roam in Chelsea were more upbeat, with one quoted as saying that it feels “more boutique hotel than youth hostel”. But with rates starting at £2,800.00 per month it’s not hard to see why this would be the expectation and the reality. One resident who had moved over from New York said that “if people are used to rents in San Francisco, New York or Seoul, as a lot of these globetrotters are, £2,800 a month ‘seems reasonable’”.
Interestingly, Roam London is now closed and their international growth toward their objective of “building a global community without borders” seems to be pedestrian at best, with outlets in Tokyo, Bali, Miami and San Francisco and no current London location despite this being cited as imminent in a reference article dated late 2016. Does this suggest that global potential and scalability may be more of a challenge than operators initial thought?
What About The Long Term?
COO of the Collective James Scott commented that “demand for this type of accommodation –where everything from washing-up liquid to toilet roll is supplied – is soaring. In every other industry you’ve got an ownership model and you’ve got a service model,” he said. “The property market doesn’t have that.” He went on to say that the movement reflects how young people, who accept they can’t get a foot on the property ladder, now value experiences over possessions, before pointing to Uber, rental bike and car services, mobile phone contracts, Netflix and Kindle as examples of how Generation Y are choosing to do away with belongings.
Whilst this may be true, we can’t help considering whether taking the logic behind the “sharing economy” and discretionary investment in depreciating assets, and applying this to the safety net, security and investment in the future that underpins property investment is realistic or sensible.
Not Just For Nomads And Freelancers
Looking to the US market, it’s interesting that Common founder Brad Hargreaves has seen more city workers among his Brooklyn tenants than freelancers and people in the creative sector. “We weren’t getting global nomads and freelancers, we were getting people who worked normal jobs in the city”, he said. “It costs around £250/week to live in a co-living space, making it 25% cheaper than a studio and about 25% more expensive than finding a room on Craigslist”.
He too has seen a shift in attitude in what renters want, he said: “What we’ve seen is a desire for experiences over ownership. Dollars are being spent on experiences as opposed to purchasing things that you own for a long period of time. I don’t know whether this is good or bad, but I think we are part of that trend.”
Planning And Development Considerations
A Southwark (a borough in South London) planning officer was quoted as saying that he didn’t underhand why “developers can’t just deliver standard housing” and that his council “remained to be convinced” of the concept, as people should not be “forced through economic necessity to live in very small flats”. Whilst this may indeed be missing the points of co-living as a concept, it is worth noting that buy in from decision makers is going to be pivotal in the large scale growth that innovators in the space are hoping to achieve.
From the limited research that we’ve undertaken it is clear that the co-living sector has some time to go before one optimum model or brand emerges, and achieves the objective of national or international scalability and a fundamental and permanent shift in the way that a significant-enough audience wishes to live.
There is certainly evidence that corroborates the viability of the emerging co-living model as part of a nascent lifestyle that certainly suits a sector of society. Also, what is certain is that in many major cities, the current solution to housing is not serving the population. But whether co-living emerges as being the prevailing solution to this remains to be seen.
We feel the key opportunity is to genuinely and successfully bridge the gap between brand aspiration and reality from tenants, creating buildings that fulfil needs and focus on wellbeing and contentedness over simply assembling all the features and facilities that make up the lifestyles and requirements of an emerging sector of society. Packing these with clever branding under the guise of filling the community void missing from the “lonely” lives of today’s millennial, will be the way to go.
Finally, putting innovation aside and looking at this from a return and asset-sweating point of view, it would be interesting to understand what could be created that is unique whilst offering maximum return on investment.
Do you have a different opinion on co-living spaces? Or did we miss anything you think is important to consider in this scene? Get in touch!