Between student life, shoestring travel and large family get-togethers, most young professionals have experienced both the joys and pains of living in close quarters with others their age. Shared interests seem to come naturally; shared bathrooms not so much. But in all cases, they come away with anecdotes and experiences that can only develop through the need to live efficiently – whether it’s a year at college, a month discovering Europe or night at grandma’s. All grown up and already making strides in the world, you’d expect them to grow out of it, both financially and socially. But with rents soaring across the world’s big cities and the global job market transitioning to a more entrepreneurial, freelance-heavy model, it makes sense that the housing industry too accommodates a more transient and collaborative tenant; one that wants to maximize encounters and involvement while minimizing cost and commitment. If this all sounds a bit hippie commune to you, you’re not that wrong – co-living startups are increasingly looking to cultivate a community within their walls; a culture of experiences and expertise within their communal kitchens and boundaryless living rooms, with many employing a model wherein existing tenants interview prospective tenants to figure out if they’re worthy of their tribe, assigning someone as ‘community manager’, in charge of group activities and general wellbeing. However, when we consider the fact that those who become members (yes, that’s what they call them) of the handful of co-living spaces that have popped in the likes of London, New York and San Francisco are by and large young, go-getting urban professionals, and that some of the biggest investments in such projects have come from the tech and real estate worlds, we begin to get the sense that it’s capitalism and not cooperative ideals that’s driving the rise of collective living. But is it working?
“The whole concept of sharing is much more acceptable today than it was previously. So on the one hand, people actually prefer to share. On the other hand, there are simply no options,” says Reza Merchant, CEO of The Collective, a co-living startup making headlines in London, seemingly undeterred that a similar business in the States, Campus, ceased operations, saying that “despite continued attempts to alter the company’s current business model and explore alternative ones, we were unable to make Campus into an economically viable business.” While founder Tom Currie has not elaborated on the exact problems that lead to the shut-down of 30-some properties Campus was operating, many have cited its failure to a misinterpretation of what communal really means, with application processes that aren’t all that inclusive. The Financial Times put it down to the fact “that low margins forced it to bet heavily on scale, and that it did not align the interests of tenants, the company and landlords… It became vulnerable both when landlords raised the rent, as well as when rooms remained unfilled because tenants rejected potential entrants.” Couple that with the fact that on average, rent prices in Campus’ New York property for example, are not considerably, if at all, lower than traditional leases (“I already have more friends than I have time to see them, and I can find cheaper rent by teaming up with just a couple of roommates,” lamented Fast Company’s Sarah Kessler, whose social experiment got cut short by Campus’s sudden closure), and it becomes clear why this a tricky business model to master. So why then, quite literally days after Campus closed down, did Common – a similar startup in New York – close over $7 million in Round A funding? How has London’s The Collective secured, refurbished and maintained five properties within a year, with plans to occupy a high rise building with hundreds of rooms by May 2016? Krash has properties in New York, Chicago, Boston and Washington D.C. and partnerships with Harvard, MIT, Metis and Fullbridge. Pioneering $10 billion co-working pioneers WeWork have too moved into the co-living industry, hedging their bets on the new trend. The trick to success in this nascent industry seems to be two-fold; to make the most of the increasingly service-based urban lifestyles, and brilliant branding. As Nitasha Tiku so scathingly put it: “co-living is the logical next step in the race to monetize the wantrepreneur lifestyle.”
It’s not difficult to see why the proponents of co-living are pandering to a new breed of young professionals when even the traditional real estate markets are carving out a modern tenant profile and making them their priority. Adorably dubbed TAMI tenants (that’s short for Tech, Advertising, Media and Information), a new crop of ‘disruptive’ or ‘innovative’ businesses have been the biggest renters of office space in entrepreneurial hubs like New York, California, Berlin and London; in 2014, tech and media tech firms accounted for a whopping 1.3 million square feet of office space in NYC, meanwhile, vacant office space in London is at a 15-year low at the end of 2015, with the media tech section dominating take-up in prime West End Locations. These businesses are ushering in with them thousands of young professionals that have also led to thousands more, who, following the same principles of why co-working spaces are attractive to inventors, innovators, entrepreneurs and freelancers, choose to work and live near others that share the same goals. In fact, as of 2014, freelancers made up 34% of the US workforce; in the UK 1.8 million people identify as freelancers or self-employed. This flexibility and temporality of a large portion of the modern workforce has already carved out a huge market for co-working spaces; on average co-working space aggregator desksurfing.com lists 700 empty desks daily, across every continent, with London, Berlin and New York leading the way.
Freelance and self-employed white collar (or should we say plaid collar – we are talking about the TAMI set, after all) professionals, due to the fact that they have no specific working hours, often find themselves working around the clock, from their beds, living rooms, coffee shops – wherever there’s Wi-Fi really – and thus millennials, and the services that cater to them, are increasingly speaking of a work-life integration, instead of the old-fashioned work-life balance. Pandering to this new ethos, co-living spaces aim to be the epitome of where work, play, sleep, eat and socialize come together for a convenient, all-inclusive monthly fee. These new-age landlords constantly remind potential tenants of the high-tech features of their accommodation (swipe your iPhone to unlock your door, sleep on a smart mattress, control the heating from your wearable tech) and, more importantly yet, the high potential of their new roommates. Surround yourself with greatness and you too will be great, a maxim gleaned from the Silicon Valley model and the constant idolization of TAMI heroes and their collaborative approaches (think Mark Zuckerberg’s hacker house, Steve Jobs and Steve Wozniak’s Apple garage, Google’s birth on a university campus), is the unspoken slogan for co-living. Throw in some lifestyle services that millennials are constantly paying for to make easier through apps anyway (laundry, cleaning, odd jobs and even romance), engineer socializing though group dinners, weekly movie nights and the automatic delivery of tea and coffee, and it all sounds like a great deal; a perfect package for the hard working millennial who won’t compromise. It’s the perfect 21st century marketing ploy, playing to a sense of self-importance and the idea that you can choose to be at the right place at the right time. But this kind of strategic serendipity, while touted as a lifestyle choice, is more of a service – and services come at a premium.