When WeWork first entered the co-working space in 2010, established real estate giants had little to worry about from their scrappy, young competitor.
That was seven years ago. Today, WeWork is valued at $20 billion and winning over major corporate clients like IBM, Spotify, and Salesforce. They're disrupting the office sector and giving titans like JLL and CBRE a good reason to be nervous.
Could their next big venture, co-living, disrupt the multifamily sector?
WeWork’s co-living arm, WeLive, recently opened its first living spaces in Washington D.C. and New York City. According to financial documents, WeLive is expected to generate 21% of the company’s revenue by 2018.
But WeLive is not the only venture of its kind. Other players, like Roam and Common, are taking the co-living concept mainstream, selling it as a way for Millennials to connect to community without sacrificing the freedom to live and work wherever they want.
Co-living, of course, is not new. We’ve seen it in many forms over the years, from
San Francisco’s hacker houses—where coders living in tight quarters launched empires like Facebook—to the community co-op housing popular on the fringes of college campuses.
But its recent popularity, especially among Millennials, has given it fresh momentum. Today, with more and more location-independent workers, or digital nomads, setting up shop across the globe, co-living is poised to change our idea of home just as coworking changed our idea of the office.
Why settle down when you can roam?
The newest batch of co-living spaces let people ditch fixed addresses and cumbersome rental contracts in favor of flexible co-living “memberships” that give them access to living spaces at multiple locations worldwide.
Roam, for example, caters to digital nomads who live and work wherever they happen to wander. With a Roam membership, it’s possible to show up at any number of locations—including San Francisco, Miami, London, Bali, and Tokyo—with only a laptop and a carry-on.
All the other essentials, from beds to butter knives, are already on site, making the hop from one spot to the next easy for minimalist Millennials. Members can switch between cities with ease and yet always feel at home. And as more properties open around the nation and the world, the possibilities get even better.
That’s the promise of global co-living concepts: furnished spaces and settling-in services that let new residents slot right into their new community, whether they need groceries, transportation or a full calendar of social events.
Where flexibility meets community
But the real appeal of co-living is the built-in sense of community it offers, especially for this generation of digital wanderers. As Common’s website puts it:
“Mainstream housing products are based on antiquated notions of hyper-individuality, consumerism and the suburban American dream. We envision…housing that’s designed to bring people together to share space, resources, ideas and more."
Co-living startups like WeLive and Roam have built their brands around the promise of flexibility and the perks of community. Both, for example, offer flexible accommodation for members who want to stay for as little as a day or a week—or as long as they want. And both balance that flexibility with an active approach to community, hosting numerous events and creating opportunities for residents to mingle in common social spaces.
What does this mean for the future of CRE?
The co-living trend builds on recent market momentum towards experiences, flexibility, and community. We’re seeing this shift in many industries, including our own. For example:
- Millennials are trading mortgages and square footage for the connectivity of a live-work-play lifestyle in an urban enclave, even if that means living in a smaller residence.
- Travelers are turning to Airbnb for a feeling of being a local rather than a tourist. As Airbnb’s latest ad campaign asks, “Why go there when you can live there?”
- Commuters are using Lyft, Uber, and car-sharing services like Car2go as a flexible alternative to actually owning a vehicle. This trend is forcing auto giants like Ford to rebrand and emphasize “mobility” over auto manufacturing.
And finally, of course, the remote workforce has completely changed how (and where) we do business—and the trend toward location-independent workers doesn’t show signs of slowing.
But the big surprise? This has ramifications for both the office and the multifamily sector, as more employees realize that the freedom to work where they want also gives them the freedom to live where they want.
In other words, co-living is a natural extension of the coworking revolution. How long until it takes off as a viable alternative to the traditional fixed location, fixed rent contract model? We suggest keeping a close eye on this trend and the disruptions (and opportunities!) it is bound to deliver.