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🔁📝In our last post, we explored the growth of coliving in New York and how it impacts communities. Revisit EC23 for more insights before diving into contrarian views on coliving below:
"Innovation in real estate is not just about adopting the latest technology; it's about reimagining how we build, sell, and live." – Dr. Andrea Chegut
Contrarian Views on Co-living and Micro-housing
Lewis Dayton wrote, Are co-living and micro-housing bad ideas whose time has come? and that got me thinking,
What if they are not the solution we think they are?
For once, I wanted to become the devil’s advocate and think about the limitations and challenges that coliving currently entails.
As we grapple with the ongoing housing crisis, solutions like co-living and micro-housing have gained traction. However, it's crucial to critically examine their long-term viability and potential drawbacks. Here are several reasons why these models might not be the panacea they're often touted to be:
1. Quality of Life Concerns:
While co-living and micro-housing aim to address affordability, they often compromise on personal space and privacy. Living in extremely small units or sharing communal spaces might initially appeal due to lower costs, but over time, these conditions can lead to stress and dissatisfaction, particularly for individuals who value privacy and personal space.
2. Social Dynamics and Loneliness:
Co-living spaces emphasize community, yet not all residents thrive in such environments. Introverted individuals or those with varying schedules might find the constant social interaction overwhelming. Additionally, the transient nature of many co-living arrangements can hinder the development of deep, meaningful relationships, potentially exacerbating feelings of loneliness. The very reason we promote coliving.
3. Financing and Investment Risks:
Despite the growing interest, obtaining financing for co-living and micro-housing projects remains challenging. Traditional lenders often view these models as risky, which can limit their scalability. The COVID-19 pandemic highlighted these vulnerabilities, causing significant occupancy declines and financial strain on operators. Relying on regional banks and facing stringent lending criteria can stymie growth and innovation in this sector.
4. Regulatory Hurdles:
Micro-housing and coliving face numerous regulatory obstacles, including zoning laws and minimum unit size requirements. These regulations are in place for reasons, including safety, health, and urban planning standards. Overcoming these legal barriers requires substantial advocacy and policy change, which can be slow and contentious.
5. Environmental and Social Impacts:
While proponents argue that micro-housing and co-living are more environmentally sustainable, the reality can be complex. High-density living increases demands on local infrastructure and resources. Moreover, these housing solutions might not be suitable for all demographics, particularly families with children or older adults, thus limiting their universality.
6. Long-term Scalability and Market Saturation:
The scalability of co-living and micro-housing remains unproven. High turnover rates and the need for constant community management add operational complexities. Furthermore, as more players enter the market, the risk of oversaturation increases, potentially leading to a race-to-the-bottom in terms of quality and service.
7. Economic Feasibility for Developers:
Developing co-living and micro-housing projects often involves higher per-square-foot costs due to the need for shared amenities and innovative design solutions. These costs can be prohibitive for developers without significant capital reserves, limiting the widespread adoption of these models.
While co-living and micro-housing present innovative responses to the housing crisis, they are not without significant challenges and limitations. As we explore these alternatives, it is crucial to balance affordability with quality of life, address regulatory hurdles thoughtfully, and ensure these models can sustainably scale to meet diverse housing needs.
In the pursuit of solving the housing crisis, we must be wary of adopting solutions that may only provide short-term relief while potentially creating new problems down the line. A holistic approach that includes a mix of housing types, robust urban planning, and inclusive policies is essential for creating resilient and thriving communities.
Let us know your thoughts? Reply to this email or write to us on coliving@artof.co
Free Coliving Advisory by Artof.Co Founders
Are you on the fence about starting your coliving business?
Do you need expert guidance to take the next step?
We at Artof.Co are offering free coliving advisory sessions to help aspiring entrepreneurs and established operators alike. Whether you're just starting out or looking to optimize your current coliving venture, we are here to provide the insights and strategies you need to succeed.
How do I apply?
Apply now for a free advisory session by filling out this Google form.
Take the first step towards building a successful coliving business with the support of industry experts.
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UK Coliving Grows 65% Year On Year Says Knight Frank
Knight Frank's Co-Living Report 2024 reveals significant growth and investment in the UK's co-living sector. Key highlights include:
- Rapid Expansion: A 65% increase in new beds delivered in 2023, brings the total operational co-living homes to 7,540—a fivefold increase since 2019.
- Investor Interest: Nearly £1bn has been invested in co-living developments since 2020,
with 45% of leading institutional investors planning to invest in co-living by 2028. - Market Potential: The co-living market targets 1.7 million individuals currently renting in shared urban accommodations.
- Demographic Diversity: 72% of co-living residents are aged 26–40, with 35% in the 31–35 age bracket.
- Future Growth: Co-living supply is expected to nearly treble to over 20,000 beds within the next three years.
- Regional Expansion: While London leads with 74% of co-living developments, cities like
Manchester, Liverpool, Sheffield, and Birmingham are emerging as key markets. - Affordability: Co-living rents in London are approximately 7% cheaper than other
private rented sector accommodations and 14% cheaper than multifamily homes. - Strong Fundamentals: High occupancy rates, premium rental yields, and resilience during
economic fluctuations are boosting lender confidence in the sector.
The report underscores the sector's ability to meet evolving housing needs and its growing maturity, making it a significant component of the UK’s rental landscape.
Everything Else Coliving
- Are you looking for a great project manager? Our dear industry colleague, Kristen Zupancic, has been a pioneer in bringing mixed-use concepts to life. She is now open to new opportunities and offering her services globally. We wanted to share this with our community because we want the best to work with the best!🌟 You can reach out to her here.
- Build-to-rent, student housing, and co-living operators are witnessing an explosion in the use of flexible rental strategies as they evolve beyond traditional leasing practices.
- From 'coliving' to 'senior living': new housing models gaining ground in Spain. Many people are opting for more temporary rental models and for homes with less space and common areas
- Housr to enter shared living space, invest up to $50 mn over 18 months. Housr plans to spend up to $50 million in the next 18 months to expand its business across India.
- Sharies opens a 6,000 m² coliving residence in Reims
- UXCO Group acquires Ecla Lille-Lomme co-living scheme. UXCO Group's acquisition of the Ecla Lille-Lomme co-living scheme increases the accommodation offering in the Lille area.
- Colonies adapts to the needs of companies and institutions
- Coliving in 2024: What’s Next for This Major Real Estate Segment?
- Tips, for Finding the Perfect Co-living Space; What to Keep in Mind
We hope you enjoyed this edition and wish you a great weekend ahead. Reply us with your thoughts on what more you want to read and if you have any feedback.
If you want us to cover anything, please mail it to us on coliving@artof.co
Gui Perdrix & Mayank Pokharna
The Artof.Co team
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