Designing living spaces specifically for individuals to cohabit has been around for a while, but has always been a fringe part of the overall residential landscape. But the popularity of these spaces, which usually feature small bedrooms and large common spaces like kitchens and dining rooms, is growing steadily. This growth will surely be accelerated by the announcement Wednesday by Medici Living Group that it is receiving what amounts to the largest ever investment in co-living. They have received €1 billion from the publicly traded investment corporation Corestate to fund 35 locations totaling 6,000 bedrooms set to come on-line in the next five years.
“There is a huge demand for co-living,” says Gunther Schmidt, CEO of Medici Living Group. I would say the potential for co-living is even greater than that of co-working, because the residential real estate market is twice that of commercial real estate. All over the world, we see Millennials are struggling to find quality housing in urban centers because of student debt, onerous lease-application processes, and high prices. We are helping to solve that problem. Our units are priced, on average, 10-20% more affordable than a standard studio in the same neighborhood. You also don’t have to worry about electricity bills, furniture shopping, or long leases.”
I asked Gunther about where he saw the ripest target markets for this type of unconventional residential offering. He told me, “We are targeting cities with populations of 500,000 or more and a tech industry presence. Within that, we select sites in the center of the city with capacity for 100-300 residents. With an average age range of 23-28, our demographic is Millennials and Generation Z.”
In order to connect tenants to both each other and to the building itself, Medici has created a mobile app that allows residents and prospective residents to communicate with other members, view the space or receive services all in one place. While he says that this allows his team to manage these properties with far fewer employees than normal, the technology is arguably more important for helping to build a community in residential buildings, much like WeWork has done in the office space. He said, “Building a global community is at the core of our mission. Millennials are not focused on buying a product; they seek out experiences. Likewise, with apartments, value is not measured by square feet, but by the culture and the environment of the space. We offer networking events, parties, and movie nights in our buildings, creating a community environment that triggers genuine connections.”
Just as co-working has revolutionized the office industry by providing more flexibility to users and more options for landlords, co-living could do the same for the multifamily sector. While I don’t think we will ever get to a point where it becomes a larger part of the housing stock than traditional units, I do see a future where many buildings have both types of designs. Sometime soon, the first question that many residential leasing agents might ask their clients could be “co-living or non?”