Is co-living the next big phenomenon?
With housing being a top priority of the government as demonstrated by the recent budget the panel at Thursday morning's Howard Kennedy Breakfast Briefing (Nick Rees of The Collective, Alistair Shaw of Stanhope and Roger Southam of Savills) considered whether co-living will be the next big phenomenon and the impact of it so far.
So what is co-living?
There is no set definition but it can broadly be described as:
- Rented accommodation that is focused around community, convenience, affordability and a high level of service for one monthly fee.
- Each person having their own private space (with en-suite bathroom and kitchen facilities) but being surrounded by a wealth of shared amenity space (for example reception area, shared kitchen dining spaces/ bars/ restaurants/ spa/gyms). As Roger Southam said "co-living is people sleeping in the flats but living in the building."
- An experience of living with a community in a social environment.
…And why is it popular?
- The community aspect is the most important part. There is always something going on. Alistair Shaw said the idea is that "you live here, you play here, you work here."
- The epidemic of loneliness which exists in large cities particularly with the millennials and older people.
- The convenience of having everything on your doorstep from a gym to a bar and restaurant.
- The network and collaboration that can be created from the people you are co-living with.
- The feeling of safety that comes with living this way.
- At present, other developers aren't giving residents anywhere to socialise and mix and if they do its more of a token gesture.
- It involves the local community and brings people together. Both Old Oak and Television Centre have involved the local communities in their project by inviting them to host events or getting them involved in running elements of the buildings which adds to them being accepted by the wider community they are in.
- No one planning use is the primary use which means that there is no one dominant party. Every use relies upon each other which adds to the sense of community.
Who is it popular with?
The panel felt strongly that millennials are looking for an experience with flexibility. They want to live transiently which co-living gives to them.
Nick Rees confirmed that The Collective Old Oak was originally aimed at millennials aged 21 right up to 34 as that is where they saw the gap in the market (as the average age of a PRS tenant is 34). Although it hadn’t initially occurred to them that it would work as a multi-generational concept, they have seen more and more residents in their 40's, 50's and 60's moving in as they realise it’s a fun, enjoyable way to live. He explained that "there is a real desire for younger people to be amongst older people".
Roger Southam of Savills mentioned a successful scheme in Holland where the retirement community and the student community have combined successfully with students learning from the older members of the community and the older people living longer and feeling younger from mixing with the students.
What are the potential challenges facing the co-living model?
- Local Planning Authorities – At present it appears that the co-living model would be sui generis use without a requirement for affordable housing. However this model is so new that most local authorities don't have the policy framework in place for it as yet which leads to delays in obtaining planning. The panel however advised that the local authorities they have encountered were open to the product.
- Changing the mind-set of developers to realise that communal space is key. Alistair Shaw rightly pointed out that "developers should be thinking from the bottom up, they should be creating a place for people to go and enjoy their lives and let that add value upstairs"
- Getting good managers on board with the project early on so that they can be involved in the layout and planning of the amenities. There needs to be a shift to view the manager as an integral as they are key to ensuring the service required is provided to the residents.
- Scalability - Although community can work anywhere, it relies on the infrastructure being available. It would work in most cities but wouldn’t necessarily work as well in places without infrastructure in place for transport and communication. It was acknowledged that you also need around 50 people minimum to create a feeling of community. Studies have shown that once you get to 150 it starts to dilute and so you need to create sub-communities within the wider community, co-living can do that.
- Valuation and lending. The mind-set of lenders needs to change as at present a developer often cannot start building until they have sold 30% of the flats. It is also unclear how the so-living model would be viewed from a valuation perspective.
- High service charges – with more common amenities service charges may increase, this could hinder the co-living model being affordable for those on lower incomes.
It's apparent is that co-living is popular and successful in London and does echo the sentiment of the big city phenomenon. It is yet to be seen whether the developing community will embrace the concept further afield.
If you would like to find out more about any of the aspects discussed in our briefing please contact Tara Edwards.