As co-living options proliferate across the globe, co-living entrepreneurs are pushing quickly into expensive, high-demand U.S. markets. But, it isn’t just a matter of money for many of the renters. They also want to enjoy a nomadic lifestyle without sacrificing the benefits of a community, and co-living provides them with the friends and freedom they need.
One of the bigger players in the co-living realm is a company called The Collective, out of Britain. CEO Reza Merchant is described in a Forbes article as “Britain’s Co-Living King” and he just raised an impressive $400 million for an international expansion in Germany and the U.S. His plan calls for the creation of 4,500 co-living apartments in those three countries, and then another 5,000 after that [1].
The 29-year-old co-founder has apparently attracted the attention of some high-value investors. One of them was an early backer for Airbnb, Jonathan Teklu out of Germany, but Merchant hasn’t identified any of the others. He only told Forbes that investors are a mixture of “institutional capital, high net worths and family offices, who all fundamentally believe in what (The Collective is) doing.”
Britain’s Co-Living King
Merchant earned his British title because of his enormous co-living apartment complex in the Old Oak part of West London. The community has 550 micro-apartments along with extensive common areas. Residents have access to a gym, a spa, a library, a cinema, and plenty of co-working space. The complex also provides various classes, and utilities are included in the rent. Apartments start at £800, or around $1,100 a month [2].
Merchant doesn’t have a tough time keeping those apartments rented. He told Forbes they are 100% occupied. He’s planning on opening two more in Britain by the end of next year, before he launches his international plans in 2020. The blueprint calls for three sites in the U.S. and three sites in Germany but he hasn’t said exactly where they will be located.
He has hinted that Berlin is a city the company has been considering. There are also reports that The Collective is bidding on properties in New York and Boston.
Millennials appear to be the target. Merchant said the average age for his Old Oak complex is 28. He said, demand is based on a similar set of circumstances in each location. He told Forbes, “You’ve got major urban hubs in these countries where growing populations face a shortage of good quality housing, and where a need for a sense of belonging and community is lacking.”
The Collective vs WeWork’s WeLive
The Collective will be facing competition in the U.S. from WeWork, which has already launched some co-living properties under the WeLive brand. With the backing of the $20 billion co-working giant, the WeLive offshoot could become a co-living powerhouse.
WeLive communities are currently operating in New York’s Lower Manhattan and in Washington D.C.’s Crystal City. They aren’t cheap however. In New York, private studios start at about $3,000 a month. In Washington, D.C. they are a bit cheaper at $1,500 a month. WeLive offers tiny apartments with communal kitchens, roof decks, and hot tubs for people who want to live there for months, or just a few nights.
Merchant doesn’t seem to feel threatened by WeLive. He said he admires his competitor, but feels he’s already built a co-living model that is extremely successful in Britain, and he’s confident that his company will be the number one co-living provider.
Competition from Germany
The Medici Living Group out of Berlin may also give Merchant a run for his money. The German company is muscling its way into the U.S. market with two different brands of co-living spaces.
One, called Medici Living, is geared toward students and other young people who need a place to live for shorter periods of time. They can book a room online and move-in immediately. In addition to several European cities, Midici Living has a complex in Los Angeles.
The other brand is designed for young professionals and digital nomads who want a longer-term arrangement, and a little more space, but nothing too permanent. You’ll find a Quarters in New York City, and starting on April 15th of this year, another one in Chicago, as reported by the Chicago Tribune.
The Chicago complex will house 175 residents in shared apartments with private bedrooms and shared bathrooms. Bedrooms will range from a tiny 77 square feet to almost 200 square feet. In addition to smart home technology, residents will have a rooftop kitchen, a lounge, outdoor grills, and co-working space.
Medici’s CEO, Gunther Schmidt, said of co-living popularity, “We’re seeing massive demand, and we’re really reacting to that demand. I think you’re going to see this expand in every city.”
He feels co-living will provide a way for college graduates to live cheaply while they pay off their student loans. And, residents don’t have to commit to a long-term deal. Medici offers a lease as short at three months. Schmidt says the average stay is about a year with an average rent of $1,600 a month, including utilities, internet, and Netflix.
And this is just the beginning for Medici, which also has some lofty goals. It currently has a total of about 1,700 residents for all its properties here and in Europe. But it hopes to increase that number to one million residents by the year 2025. That includes plans to expand to every major U.S. city in the next two years.
Co-Living Communities Sprouting Like Mushrooms
While the bigger names are battling it out, there are plenty of smaller co-living communities taking shape. A company called The Guild was the first to launch co-living in Atlanta. It has now created two small co-living spaces there, but a few bigger operators may also be moving to Atlanta in the near future.
Bisnow reported, co-living companies Ollie and Common consider Atlanta a strong candidate for their expansion plans. They are currently both operating in New York. Ollie is also operating in Pittsburgh, with plans underway for co-living communities in Los Angeles, Boston, and Jersey City. Common is headed for Chicago, Washington, D.C., San Francisco, and New Orleans [3].
Although millennials are the ones driving this new trend, Ollie CEO, Chris Bledsoe, said it isn’t just millennials. He told Bisnow, about 20% of his residents are over the age of 50.
Links:
[1] Forbes Article
