Business ideas for 2017: Co-living
Co-living is the new co-working. With some start-ups promoting this house sharing economy, should you follow suit and launch a co-living business?
Following the growth of the co-working economy, comes co-living.
Described as “the new style of community living for millennials”, co-living refers to shared living spaces that operate much like a hotel with cleaners, free WiFi and bills included, but with added extras such as workspaces, gyms, and other perks like movie rooms, libraries, spas and roof terraces.
Co-living maximises on changing work and living trends to give people who like to use technology to work remotely (otherwise known as digital nomads), the ability to do just that in cities around the world.
First pioneered by New York-based property management company Common in 2015 to redefine how young adults live in cities, co-living gives a residential spin on co-working so, instead of renting a desk in a shared office you get a bedroom in a shared house. Common now has five co-living properties across America and has closed more than $25m in funding.
In the last year, property entrepreneurs have followed Common’s lead and sought to take a piece of the co-living pie with a small cluster of start-ups now operating in the space.
In the UK we’ve seen the launch of The Collective and the recent addition of Roam but that doesn’t mean that the UK co-living market is saturated – yet. Which brings us on to why co-living is a hot business opportunity for 2017…
Starting a co-living business: Why it’s a good business idea
The urban housing crisis is a very real issue so, while co-living caters to digital nomads, it serves a much more economical purpose in providing housing to young professionals who can’t afford, or don’t yet want, a mortgage, and are fed up with renting and dealing with landlords.
According to data from ONS, UK house prices rose 7.7% last year and, with prices expected to rise again this year, you can expect to see a similar increase in people seeking alternatives to purchasing their own home.
Co-living also helps to create a sense of community and supports increased collaboration.
Speaking to the Evening Standard last year, Young Gun Reza Merchant, chief executive of The Collective – which opened “the world's largest co-living space” in London last May – suggested that co-living is “a product that caters to the changing lifestyle trends of a demographic which more and more values experiences over material possessions, and is increasingly open to the idea of sharing and collaborating.”
A market which is growing at a rapid pace, further evidence of the potential of co-living is demonstrated by the news that key players in the commercial property space are starting to realise the opportunities of co-living. For example, US-headquartered shared workspace provider WeWork – which originally started out in co-working – has recently moved into co-living.
Co-living also has the capacity to be a lucrative business. The Collective charges over £1,000 a month for some if its rooms, inclusive of its gym, library, games room, cleaners, and bills.
International co-living company Roam, which launched its first UK location last month, has an even higher price point with rooms starting at £680 a week.
Co-living business opportunities
As applies to anyone starting a business in this industry, you'll need to have access to a lot of funding in order to finance your property venture. However, you won't necessarily have to buy a property, or properties, directly.
Take Common for instance, it works with estate agencies to manage buildings as a landlord in exchange for a cut of the tenants’ rent and of the property’s net operating income; so this is a potential business model to consider.
You should also see our guide on funding options to become a property developer here.
Location, audience and USP are key focuses for co-living. There are already a growing number of co-living spaces in the capital so you may want to consider targeting other fast-growing cities such as Manchester and Liverpool.
Take inspiration from existing co-living providers when thinking about what your co-living space will offer. In London, housing body Peabody has partnered with workspace provider The Trampery to launch affordable workspace on-site together with accommodation through a live/work scheme targeted at creative and tech entrepreneurs. Based in Hackney Wick, work to create the Fish Island development is currently ongoing.
UK newcomer Roam is another business to watch; its co-living space in Kensington includes private suites with bed, bathroom and shower, co-working desks with “battle-tested WiFi”, and the option for users to ‘pay as you stay' so they can come and go weekly or monthly.
You could also collaborate with other start-ups in the space to make your co-living venture a reality. Common buys its mattresses from Casper and furniture from other local businesses.
Speaking about the future of co-living, The Collective’s COO James Scott said:
“In the future we will all be ‘homeless’. Where previously we moved straight from adolescence into adulthood, we now take our time to become more socially liberated and culturally diverse, experimenting to find out what – and who – we love, before committing to it in adulthood.
“This suspended adulthood and the rise of the digital nomad results in an increase in mobility and a reduced desire to settle. Eventually, we will move to a model of subscription homes or providing ‘Living as a Service’.”
As journalist Suzanne Bearne puts it, “with no end in sight for Generation Rent and a growing desire for ultra convenience, the co-living trend looks only set to boom.”