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.