Increasingly unaffordable housing has boosted demand for co-living. Christopher O’Dea
Co-living can be seen as a logical extension of the co-working phenomenon. The concept is billed as an opportunity for young professionals to live in high-quality residences with high-quality facilities while living – and working – alongside like-minded people. Wikipedia describes it as “shared housing for people with shared intentions”. It can also be thought of as an up-market dormitory.
Despite its positive, modern language, co-living has been compared with the tenements of a century ago, when landlords devised makeshift quarters by subdividing almost any building, or simply leasing it to numerous, typically cash-strapped, tenants. That is because the revival of interest in single-room occupancy in communal settings comes largely from residents experiencing tough economic circumstances.
Creation of housing units has fallen behind the rate that would keep pace with population growth, and much of the housing created in urban areas has been class-A property at the highest rent levels. This has raised the cost of renting for single people above what all but the highest earners can afford, while the increase in house prices has increased deposits, meaning many millennials have deferred buying their first home.
The situation has sparked innovation, and co-living is emerging. WeWork, the co-working giant, has launched its WeLive communal living brand, while the launch of numerous specialist co-living operators demonstrates the concept’s broad appeal to property owners.
Co-living is getting a boost in tech-driven cities where housing costs are most prohibitive. In the San Francisco area, a former graphic designer started OpenDoor, which forms communities with strong brand identities based on creative services or social impact – one even houses a non-profit organisation that teaches young black people how to code.
OpenDoor’s communities achieve high retention and low vacancy, and its projects – which range from large homes to 30,000sqft multifamily buildings – “deliver strong unit economics, financially outperforming traditional apartments while also offering residents incredible value at reasonable rents”.
A growing force
Berlin-based Medici Living Group operates co-living residences across Germany, Amsterdam, New York City, Chicago, and Los Angeles.
The company has two brands: Medici Living offers online booking of shared apartments for a flat rate, targeting students, interns and trainees seeking medium-term accommodation. Quarters – as the name implies – appeals to young professionals and digital natives seeking longer-term accommodation. The latter is billed as a global network of members who can occupy quarters in any of the firm’s locations around the world.
“With few possessions, an aversion to long-term commitments, and a desire to travel, digitally native nomads are fuelling demand for a new form of residential space”
It is perhaps no surprise that co-living has been hailed as the future by a hotelier. At a conference in New York City in December, Ian Schrager noted that co-living will be the next big disrupter in hospitality as the lifestyle habits of the millennial generation transform the way residential property is used. With few possessions, an aversion to long-term commitments, and a desire to travel, digitally-native nomads are fuelling demand for a new form of residential space that is globally consistent and accessible on their schedule, preferably by app.
Medici Living sees global mobility as the sweet spot for co-living. The company works with property owners to construct new buildings tailored to the co-living concept, increasing space efficiency by designing floor plans and systems around the common areas, and using digital technology in leasing, maintenance, and operational functions.
The goal, according to Medici, is to “counteract the housing shortage and to promote the exchange of cultures by international tenants”. It’s a proposition designed to appeal to millennials’ yearning that everything they do also does some good.
So far, it appears to be working.
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