The residential rental world has been on fire for a long time. In a decade where traditionally successful property types like retail and office find themselves facing massive demand shocks, people still need a place to live, and with many areas experiencing significant price appreciation, people everywhere are looking for more cost-effective ways to access high-quality rental accommodations.
This is the backdrop to modern co-living. Sure, COVID-era concerns about living with roommates during a pandemic caused disruption, culminating in the partial collapse of leading co-living brands The Collective and Quarters. But co-living continues undaunted, a major force in multifamily, with hundreds of beds continuing to be developed across the Americas, Europe, and Asia.
According to Susan Tjarksen, managing director with Cushman & Wakefield, “Co-living, like class-A studios, have done very well during the pandemic. There were some rent discounts and concessions, since denser living was difficult during the pandemic. But co-living didn’t go away. Flexible apartments with flexible lease terms and furniture included, allowing you to move without needing to hire movers, stayed popular. And now there has been a resurgence post-COVID. With many companies returning to the office, you can’t always commute to San Francisco from Montana anymore.”
The continued strength of the niche through COVID’s disruption points to a few fundamental strengths co-living has in its corner. When properly implemented and stakeholders aligned, co-living provides an opportunity to formalise the very common occurrence of roommates banding together to get access to better housing, at a cheaper price point. This keeps rents down for each individual renter, who signs a lease by the bed, while keeping rent per square foot high for the landlord.
The other big benefit of co-living comes by way of community. We discussed in a recent blog article the challenge of loneliness faced by many in the hybrid post-COVID world. By making it easy to share common areas and giving access to a group of potentially like-minded peers, co-living represents an alternative to that loneliness. For young people who want to keep costs down and may be coming out of the buzz and energy of university housing, as well as for Baby Boomers looking to downsize, co-living’s community emphasis presents an attractive option to consider.
There have been enough co-living success stories and bankruptcies that triumph in the niche is completely possible, but largely up to the strength of execution and proper planning the co-living provider or landlord brings to the table from day one of project scoping. While some of this comes down to the infrastructure of the co-living provider and the relationship between them and the landlord, if they are separate, there are also important operational elements to consider.
Within this scope, planning an outstanding tech strategy will pay dividends. There are three areas where co-living owners and prospective co-living owners alike can derive big impacts from strategically leveraging the right tech tools. These are frictionless access, community communication, and asserting a competitive advantage against other types of housing.
The need for frictionless access and space use
First, consider that many of these spaces are branded as being frictionless and easy to move into or out of. With furniture provided and often a range of amenity spaces, like co-working facilities and upscale gym areas available on-site, it’s very important that co-living properties have a way to get people with different levels of credentials into and out of their various rooms and facilities without stress. And with more unrelated people sharing each suite than in traditional multifamily properties, there is a good chance that co-living residents will have more guests than residents at more standard apartment complexes.
This is an excellent use case for three separate but related tech tools: touchless access systems, guest management technology, and space reservation systems. On the Spaceflow platform, for instance, occupiers can gain building access via QR code and then receive directions to specific amenity spaces or rooms. By combining these three tools, co-living managers can make their spaces completely controllable from anywhere, allowing access to residents and verified guests and tracking the use of amenities at all times of the day.
According to Mark Bryan, director of innovation and research for M+A Architects, access control tools or sensors that can tell people whether the gym or lounge room is buzzing with activity can also be a great way to help individual co-living renters feel like they are part of an active community, instead of always showing up during off hours when no one else is around.
There is also a logistical angle here as well. Co-living properties have large amounts of unrelated renters, and often bundle together services and utilities together with rent. Because of these factors, keeping track of leases and payments can be more challenging than in traditional apartments. Choosing a tech solution that has a stated emphasis on co-living as opposed to a “one size fits all” solution can be particularly helpful to account for the breadth of leasing variety co-living properties can face, especially if, like leading co-living provider X Communities, your property includes both traditional and co-living units.
The need for a collaborative, communicative, community-driven element
The second main reason why co-living tends to really benefit from tech use is the community emphasis of most co-living spaces. According to research from Invesco:
“While it may seem that this notion of “know thy neighbor” is merely a fresh additive to traditional multifamily marketing, there appears to be a psychological shift occurring that suggests co-living may indeed be a solution to societal challenges. According to research conducted in the US, loneliness has become increasingly widespread in young adults, correlated positively with increased social media usage. This corroborates the results of Space10’s (IKEA’s future-living lab) One Shared House 2030 survey, which suggest the main reason people are interested in co-living is because they want to be social and connect with people in a meaningful way.”
Choosing to live in a co-living space implies some amount of self-selection for openness to socializing, and owners should provide tools that make that easier to act on. Mark added that “Technology is important in co-living in a way that allows people to see what others are doing and form organic bonds.” He added that while in the past many people derived much of their socialization from the workplace, that is changing. “These days we are living asynchronously,” he said. “Our days used to have a linear trajectory, where we started at home, went to work, and then did a social activity and went back home. It’s not like that anymore for some and people have to find ways to make that work for them. Co-living allows people to have interactions when they otherwise might not.”
Giving residents easy ways to communicate and plan activities is an 80/20 kind of tech implementation owners can choose to make, particularly in larger properties. For instance, one of Spaceflow’s co-living clients is Gravity, with four co-living properties across London. Gravity community manager Alex Jones said that “Spaceflow has helped Gravity consolidate all communications into one easy to track channel, providing the members with a centralized hub of all events, announcements, partner benefits and ticketing needs. Without Spaceflow, Gravity would be using multiple platforms to organize communications as well as spending valuable time and energy connecting the various softwares.” It’s one thing to coordinate with the three other people living in your suite, via post-it notes or a group text, but connecting and planning activities with dozens of other suites in the same building is a different story entirely.
High-quality tenant experience apps also allow space managers and users alike to plan events, invite their building-mates, and communicate about property updates. In fact, providing a friendly-feeling resident platform that is separate from the cold-feeling property management platform many buildings use to collect rent can be a big experience win itself, giving managers a chance to spread the news about parties, volunteer events, and other activities integral to the co-living experience.
Increasing competition from traditional apartments
While co-living properties offer rental discounts when compared to multifamily housing, renters will nonetheless still cross-shop co-living with small apartments such as micro-units, studios, or one bedroom units. This is another reason why co-living providers need to stay on top of their tech game, lest they lose prospective renters to traditional apartment complexes.
Susan, from Cushman & Wakefield, explained that “co-living assets have been built for the most part by tech companies, and because they attracted venture capital money they were fairly well advanced with their tech integrations. Not just turning the lights on, but things like touchless entry, one-touch rent payment, virtual tours, and things like that. But COVID-19 forced more traditional operators to start using these tech features that co-living operators were using.”
But while co-living has lost some of this competitive advantage, Susan added that there is a good side to this increased tech adoption. Co-living providers used to face investors who might not understand how a renter would sign a lease sight unseen, but with more tech being used by more operators, that is changing. With more investors and renters getting used to the prevalence of tech at every step of the multifamily renter user journey, co-living operators should consider whether they can deploy cutting edge tech platforms to stay ahead of the multifamily market as a whole.
Advice for developers considering co-living
As we mentioned above it’s a unique time for co-living, with success and failures alike to gain inspiration or warning from. Property companies considering rolling out a co-living offering need to do their research and avoid falling into the trap of building these properties as if they were just standard apartments that rent by the bed. They are fundamentally different, even if your traditional units sometimes see three or four separate roommates here and there, with their own requirements and needs shaped by the unique personalities and living arrangements that co-living implies.
Susan pointed to three particularly important amenities co-living spaces should consider providing: co-working spaces on-site, outdoor spaces such as rooftop decks that can be used for work or R&R, and amenities and infrastructure for dogs. She also emphasised keeping a 1:1 ratio of bedrooms to bathrooms, particularly in the post-COVID era.
In terms of tech, Susan added that user-friendliness is key. “I think it's hyper-important for platforms to be user friendly for the younger generation,” she said. “Not that they aren’t tech savvy, but they’re very particular about things that are too complicated or too gimmicky. Think about Instagram, which works well because you look at it and instantly know how to use it.”
Mark pointed to community partnerships as one way for co-living owners to enhance their projects, as well. “Maybe you can build a partnership with a community gym, so you don’t need to put one onsite,” he said. He also suggested listening to community needs instead of dictating what amenities and services you think renters need. “How can we engage with our communities so they can tell us what the amenities should be,” he asked, “instead of the “flashbang” top down amenity planning approach? People want a cool factor from co-living but maybe they want other things, too, like mental wellness retreats. I think you’re starting to see more curated amenities around an idea instead of blanket ones.”
Tech tools can be a crucial part of that kind of community listening as well. On the Spaceflow app, we provide a number of feedback collection tools such as native poll functionality built into the Newsfeed, making it efficient for managers to track what residents really want. If owners do choose to invest in such a platform, there is a leasing tactic here as well: sharing limited access to the app with prospective renters can give people on the fence about renting an inside look into the community’s DNA and events.
Tech is far from the only thing co-living owners need to consider. The design of co-living spaces, the branding and community programming that is chosen, the location and community partnerships, as well as other factors like ESG considerations are all important considerations that need real thought and effort from day one of project planning. But tech can be an excellent differentiator, efficiency booster, and even an amenity in and of itself, particularly in the community-first framework of most co-living properties.
Planning of a co-living project’s tech strategy should also begin on day one of project planning. What should the community highlight? How top-down or user-driven will amenitization and design decisions be? Do you want to make your project friendly to guests and visitors? Are you going to take steps to help your community plan and execute their own organic events and activities, around their own passions and focus areas? If you’re considering a new co-living project these are all fundamental questions that can’t wait, and tech is intricately interwoven through each of them.