Investors anticipate co-living to be a much bigger opportunity than co-working since the residential market is twice the size of the commercial market.

 

I got my first taste of this burgeoning category three years ago when I met Brad Hargreaves, founder of Common. And believe me, back in 2015, co-living was a nascent category – some people thought it was interesting, most considered it odd, very few considered it a worthwhile investment.

• Since then, the category has exploded.
• The concept of on-demand housing is genius – click on an app, and order up an apartment just as you would an Uber.
• Co-living is shaping up to be the next big thing for a number of reasons including people’s desire for more flexibility, more people remain single, a lack of affordable housing in urban centers (co-living runs 10-20% less than a studio, the apartment comes furnished and includes amenities like wi-fi and cleaning service). Co-living also provides built-in community.
• Importantly, co-living has broad appeal, it’s not just for millennials.

 

Read on below for more on companies currently pursuing this opportunity as well as an update on co-working.

 

More companies are raising capital with the goal of becoming “the WeWorks of Co-Living”

Keep an eye on Medici Living, a Berlin-based co-living company.

• They are building out 35 co-living facilities in Europe — and even more in the U.S.
• In the U.S., Medici has buildings in Chicago and New York (pics of the newly muraled facade of their LES  building below). Their properties in the US are named “Quarters.”
• They’re looking at Boston, D.C., Denver, Philadelphia, Los Angeles, San Francisco and Austin, Texas.
• They hired Mark Smith from Pret A Manger in September to lead their global expansion.

 

 

 

Property Markets Group (PMG), a venture capital firm committed $300 million in equity to launch its own national co-living project called X Social Communities. Their website promises that “experience is the new luxury.”

 

 

CO-WORKING: ENOUGH ALREADY!

The joke used to be that there was a Starbucks, or a drugstore, on every corner, now it’s a WeWork. And if not literally a WeWork, some kind of co-working space. I don’t understand how all these co-working spaces can survive.

 

• How much co-working is too much? At the moment, restaurants, hotels, retail spaces – any under-utilized brick-and-mortar or commercial space is being turned into co-working.
• At this rate, it doesn’t appear to be particularly profitable.
• WeWork is losing money at a pace greater than 100% of its revenue. In the 3^rd Q they lost $497 million.
• And that, apparently, signals to WeWork that they should also be getting into hotels….

 

CO-WORKING HOTELS FOR THE DIGITAL NOMAD

Backed by WeWork founder Adam Neumann, Selina (138 Bowery) is a brand new hospitality endeavor that marries co-working options with hotel rooms, retail, and food offerings. Per their website, they offer a new way to Stay, Explore, Co-Work.

 

Other examples of hotels with outstanding FREE co-working spaces (available to anybody, not just hotel guests), include:

• The Public (215 Chrystie): not my favorite hotel but the co-working options in the lobby and the gardens are fabulous (pic below, upper right).
• Citizen M (189 Bowery) recently opened with cool art and décor by Meres One and phenomenal FREE co-working spaces available throughout the hotel (pic below, upper left).
• Ace’s new Sister City Hotel (225 Bowery) is getting close to opening (they say January 2019, I say March). While the date is up in the air, I am certain their co-working options will be gorgeous.
• The new Moxy Hotel is scheduled for the Bowery across the street from Selina sometime in late 2019 or 2020.

 

 

 

CHURCH BUILDINGS REPURPOSED FOR RESIDENTIAL & CO-WORKING

6,000 – 10,000 churches are closing each year in America. And the same thing is happening in other parts of the world, especially in Europe.

• Old churches, converted into residential spaces, are enormously popular with sophisticated, design-savvy buyers who appreciate the architecture, open floor plans, exposed brick, vaulted ceilings, and arched windows.
• Churches are also being turned into restaurants, microbreweries, boutiques, gyms and, of course, co-working spaces.

 

• Some churches are going the multipurpose route, places of worship plus….
• Missional Wisdom, for example, is attracting florists, stained-glass-window artists, yoga studios and more co-working.
• Supposedly, multipurpose spaces lower the barriers to entry for churches. When someone using a co-working space experiences a personal crisis, they have a comfortable place to turn(?).

 

Bottom Line.

The buzz in real estate circles – especially in dense, urban areas, is all about Space-As-A-Service (or SPasS).

Co-living is a direct outgrowth of co-working and ride sharing (i.e. flexible usage without the burden of ownership or onerous leases).

Technology startups made the disruption possible. Now, it is spreading to residential. Look for co-living to become the next big thing.

Demographics are in co-living’s favor with the number of singles on the rise. Add in decluttering and the “experiences over things” movement and you have the perfect storm with people wanting things to be easy and convenient vs. dealing with buying/moving furniture, signing leases etc.

Also, look for this trend to extend beyond roommates to include groups of friends. I anticipate we will also see co-living extend beyond millennials.

Anyone looking for a freer, less encumbered existence will find co-living an intriguing possibility. I, for one, yearn to be untethered from my possessions. I long to have only enough “stuff” to fit in a suitcase. To be able to quickly and easily pick up and move. To be able to experience new locations and new communities at the drop of a hat sounds dreamy to me.

Also sounds like I’ve got itchy feet. Time to plan new adventures.