Are Consumers Into Co-Living Post Covid-19?
Co-living is a new rental trend with shared housing arrangements that have grown in popularity, especially in major cities. This new type of housing offers a lower cost of living for new construction with luxury finish amenities with the trade-off of residents giving up private living spaces. Each co-living company has a different approach to community building and the mix of shared/private spaces varies, with some offering private 200 sq. ft. bedrooms with ensuite bathroom and others using a pod-based or bunk bed-style model.
Recently making big moves in the space, Common, a tech-based multifamily brand and operator, acquired select management agreements from Starcity, another co-living startup. This move now makes Common the largest co-living operator in the world. Common is not disclosing the acquisition price.
This acquisition follows the news of Starcity’s acquisition of Ollie, an East coast based co-living company with a proprietary technology stack, which includes a property management system, leasing system, and a roommate matching platform.
Why are Millennials and Generation Z drawn to co-living:
- Affordability. Co-living will cost a renter 15%-20% less than the cost of renting a studio apartment in the same market. Compared with today’s traditional apartment rentals co-living is friendlier to lower credit scores, lower security deposits, and offers greater flexibility with lease terms.
- Offers A Variety Of “Free” Amenities. Incorporated into the total rental fees include a wide selection of activities, shared workspaces, and amenities. Considering the whole package attracts Millennials and Gen Z, they think co-living allows them to save money.
- Sense of Community. Extraverted consumers find co-living attractive as it allows them to be connected to like-minded people. It is a great avenue to make new friends and collaborate with other business ventures or creative careers, especially when moving to a new city.
- Prime Locations. Co-habitating allows for gen z and millennials to live in a central area and neighborhood without paying the total price tag. Co-living makes living in the city convenient and an attractive deal to young consumers.
- Flexibility. Millennials and Gen Z want to be on the go, traveling, and have a limited amount of commitment. Co-living leases are usually very flexible and perfectly with an unpredictable schedule and offer mobility that is generally not offered when you rent alone or buy.
Future of Co-Living:
Earlier this year, it looked like shared housing was going to come to an end, the widespread shift to remote work and crowds fleeing major cities. But co-living developments have continued to rise despite the pandemic. Companies with vacant hotel rooms, office areas, and retail space are ready to convert their building into extended stays, micro-rooms, and co-living apartments.
It is clear that the subscription economy is expanding, but businesses have to be mindful of the culture in their communities to maintain an authentic, customer-oriented mindset. Although affordability is top of mind for this consumer, they still want to find a community that fits their lifestyle.
Co-living startups are turning roommate living into a product. Overall, co-living has held up as well or better than multifamily developments during the pandemic because they offer a better value for renters who don’t mind sharing common spaces and amenities with a roommate. According to Cushman Wakefield, around 7,820 co-living beds in the United States are operated by providers like Common Living.
Cushman and Wakefield estimate for the next five years there will be more than 54,000 co-living spaces in the pipeline by companies like Common Living. As co-living companies are expanding, they will begin migrating into secondary cities like Portland, Austin, and Denver. According to the most recent data available from the Census Bureau’s 2019 1 Year American Community Survey, found that millennials aged 25-39 were already migrating from major cities like New York City and Chicago and moving to states like Texas, Colorado, Washington, and Arizona. Since the pandemic in March 2020, those trends soared according to date from Linkedln and U-Haul.