The co-living revolution
Co-living is the latest real estate buzzword popping up across the industry as it gets to grips with the opportunities of this emerging model.
Since the Mayor of London included reference to purpose built shared living in the 2017 Draft London Plan, conversation in the press and at conferences has been steadily increasing and there are now more players in this arena – from more familiar and established names like WeLive (WeWork’s co-living offer) and The Collective, to new entrants like Noiascape.
"The message from the Mayor is that alternative residential models looking at co-living and micro living are an important part of the residential mix that makes the capital accessible and attractive for all people, allowing different individuals and communities to find the accommodation they need," says Rebecca Wardle, Real Estate Partner at Trowers & Hamlins.
"As a residential class, co-living is understood to mean living units that are not self-contained, i.e. – normally just a bedroom with or without a private bathroom but with shared cooking and leisure facilities," explains Tom Barton, Real Estate Associate at Trowers & Hamlins. "This means that it is exempt from the normal requirements that would be expected of a typical build-to-rent scheme. Legal space standards do not apply to co-living, giving operators more flexibility to create a variety of room types and sizes and allowing them to invest more heavily in the shared facilities on offer."
"Co-living is ideal accommodation for graduates or individuals moving to London who want low-commitment, low maintenance accommodation that also provides a social community that they can tap into, as well as shared facilities such as club rooms, gym, cinema, work areas and cafes for example," Barton continues.
"The similarity to student accommodation means that student providers are looking at this sector with interest."
Reza Merchant’s The Collective emphasises the positive community environment of its co-living spaces, even going so far as to claim a 'cure for loneliness' in the city. "The Collective at Old Oak is currently advertised at £1,000 per month, with a three month minimum, and all facilities included," Wardle describes. "What is still being debated is who is co-living for? It seems to have more to offer the young professional or couples without children but this may change."
Kyle Holling, Real Estate Partner at Trowers & Hamlins highlights, "There are some overlaps and potentially some attractions for retirees too. The UK senior living market is in its infancy but is growing to become much more established, as it is in other countries. It is evolving to be a form of co-living with older people living in their own homes, centred in communities which offer an attractive lifestyle in later life along with the comfort and security of care and support packages to maintain independence. These communities tend to offer services and facilities akin to the co-living model - restaurants, cinemas, gyms and bars.
There are many possible models but the urban, city centre village seems likely to grow significantly and we are starting to see these facilities in London for the first time. The live-work element may be less of a focus – though it will still be important for many in this demographic – as may be the financial position of occupiers, but the underlying principle of a quality location and quality services on the doorstep are aligned." According to Age UK over two million people over 75 years old live alone in the UK. As new models emerge, there is the potential for co-living to be an attractive alternative to living alone and a way to tackle loneliness amongst the elderly.
As technology continues to blur the boundary between work and personal life, the idea of living where you work becomes more feasible and even desirable. People don’t want to spend their lives commuting, it can make sense to live in the same building as people in a similar industry and market. WeLive will blur that boundary creating mini-clusters of buildings where people are living and working together.
"Decisions about where someone will live are typically based on price and location; cheaper accommodation away from the centre of town is a compromise people have to make. Co-living can create an alternative choice to live more affordably in a central location," says Holling.
"In the UK, the co-living model presents some interesting questions," suggests Barton. "Will it count towards local authorities’ net new homes targets? Will there be restrictions or guidance on how the money co-living operators will pay in lieu of affordable housing is used? As more scrutiny is placed on spending and affordable housing, these are questions that will need to be addressed. If the provision of co-living space results in fewer new self-contained units coming forward I can see them being unpopular with authorities who are under enormous pressure to deliver new units."
Along with the growth of Airbnb, mainstream hotel operators are looking at how they can respond to a growing desire for more communal spaces. In the USA, Marriott is trialling hotel rooms in small clusters around shared facilities, catering to people in the same price point as a standard hotel room. The model is about providing a more sociable alternative to a standard hotel room which is likely to appeal to groups and families as well as individuals who want the option of spending time with fellow travellers.
The global model for short term, live-work co-living is also compelling. Operators including ‘Roam’ offer membership allowing members to move between different cities and countries to stay and work in Roam accommodation. As well as for businesses with increasingly mobile and flexible workforces, this could have huge potential for sociable globetrotters of all ages. The possibility of businesses having global contracts with co-living providers when they’re moving staff around could create a more appealing option to endless hotel rooms. In the same way that large corporates are taking WeWork space to create flexible capacity for workspace, they could also have employees co-living on temporary basis.
Key workers are another group who could benefit from the co-living movement where they need to be in a central location for a fixed or short amount of time while they find permanent accommodation.
"Co-living could be a new tool in the competition for attracting talent," suggests Wardle.
"For companies recruiting from outside into major cities such as London it can be a problematic if new hires can’t find somewhere to live. Co-living could offer a workable and appealing temporary solution to this difficulty; if a company could provide accommodation to the new hire for up for three months while they find something, that could speed up the process of hiring better people, making a huge impact on the business."