Last week, we co-hosted Co-Liv France to explore how shared living operators, developers, and investors are adapting to find more resilient and sustainable strategies for 2021 and the years ahead.

Not only is this vital in respect to how the global pandemic has strained the rental market, but it felt particularly relevant following the news that Quarter's $300M expansion into the U.S. ended in bankruptcy last month.

What does this say about the coliving movement as a whole? What kinds of strengths and weaknesses has the last year exposed in the industry? And what are the core lessons we can build upon moving forward?

We brought together Williams Johnson Mota (founder of B-Hive Living & Portuguese Co-Liv Ambassador), Philip Grace (Director of Development for Node & former Head of Global Expansion for Quarters), and Connor Moore (Coliving Investment Associate for Nomos Group Holdings & Head of Content at Co-Liv) to discuss and unfold insights on the current shared living landscape.

Today, we'd like to share the key insights we took from this event.

If you have different ideas or disagree about what's most vital for shared living operators, developers, or investors to do today – not just to survive, but to thrive – we'd love to hear your perspective and thoughts! It's a massive topic and this list is far from complete. Please don't hesitate to send us a message.

Let's take a look at some of the big ideas:

1— 80% of health outcomes are related to housing decisions. 🏡

Especially under the pressures of global confinement and becoming home-bodies, it's really important to remember the importance of our living space and how defining it can be to our lives and well-being.

The quality of space we live in, the people we live with, and the local environment around the home are key to supporting wellness. And the need for wellness has never been greater. As a hassle-free, inclusive, flexible rental model, coliving is in a particularly strong position to meet this demand.

Particularly for developers and investors, it's crucial to remember that you are providing homes for people. You can't squeeze people into 14m2 bedrooms and expect them to stay. And the more you substitute a relationship to residents with metrics and stats, the greater the risk of not meeting their needs in a sustainable way. As Philip puts it, "we can't cram people into 14m2 and expect them to stay."

We're providing homes for people. This is not a sector where aliens live. It's not defined by age. It's a lifestyle choice.

— Philip Grace
Node Living

2— Blended-use developments are proving resilient and inevitable. 🌀

High-density, robust environments that combine more kinds of space (for example: coworking, coliving, build-to-rent, micro-apartments, local café, rooftop bar, shops, market, etc.), are not only more attractive to residents since they offer more accessibility and conveniences, but they also help distribute risk for developers and owners. This is proving to be a highly resilient, competitive, and adaptable model. We predict it will only become a more prevalent strategy for developers and investors entering the market ahead.

3— Think carefully when entering a master lease agreement. 🔥

According to Philip, "you can't get rich from doing management agreements. You really need to be a Greystar to have that volume to make something work." In any case, master lease agreements may be a necessity, especially when scaling or expanding, as with the case of Quarters. However, as the pandemic has demonstrated, master lease agreements carry significant risk to operators and owners alike.

Typically, 60-65% of an operator's revenue goes to the landlord in a master lease agreement. If it costs 20% to operate the building, that leaves a 15% margin – and no room for error. If rental prices and occupancy take a hit at the same time, the business may collapse. In several cities in the US, prices per coliving and multi-family residences dropped 30% during the pandemic. Occupancy dropped up to 70% in some cities.

Quarters, Knotel, and Vanke were all respectively built upon master lease agreements, and such downturns in the market proved fatal. So what can be done to avoid the pitfalls? What are the most resilient strategies moving forward?

You need to have a blended approach. You need to create partnerships. That's what life is about. That's what business is about.

— Philip Grace
Node Living

Building strong partnerships between operators and building owners is vital. If you build a healthy partnership, you're better able to create a great, well-designed environment where people can live. The construction of that partnership is key: it might be a quasi-management agreement or a profit-share deal.

There are dozens of different ways to cook it up. But a partnership means that both parties agree on the way forward. And they both agree that you cannot successfully build a sustainable operation unless both parties are profiting out of it.

4— What strengths has the pandemic revealed about shared living? 💪

➞ For shared living residents: As Connor pointed out, compared to traditional multi-family or residential models, shared living and coliving operators are generally much more active and present to residents. With all residents in WhatsApp groups, email systems, or dedicated apps, these operators have been able to communicate and implement safety measures more quickly and seamlessly than hands-off landlords. Safety provided, confinement may be less trying for coliving residents. Or at the least, they are better able to maintain social contact than those forced into true self-isolation.

➞ For developers and investors: According to a Cushman & Wakefield's rental survey in November 2020, coliving in the US has actually been on par or better-off than traditional multi-family or residential living. The young professional demographics that most coliving spaces attract were generally not hit as hard through the pandemic, showing that even despite economic downturns, coliving is in a resilient position.

5— Combatting loneliness might be the wrong problem. 📲

Coliving has long stood to help combat and overcome the crises of loneliness. But is it possible we are solving the wrong problem? Seen another way, loneliness may not the core problem but rather a symptom of our increasingly distracted, phone-addicted, and impersonal lifestyles. Again, wellness may be the antidote. And coliving is incredibly well-positioned to offer this.

We're not lonely. We are absent.

— Williams Johnson
B-Hive Living

6— Latent opportunities to be more sustainable 🌱

Today, consumers want sustainable products and for companies to be environmentally responsible. Williams points out two important points to help shared living spaces align to our environmental needs. Firstly, millennials have a much greater awareness and knowledge about sustainability. Hiring more from this generation to guide your sustainability practices can immediately help minimize your operational footprint.

On the industry scale, real estate does not have a great track record for sustainability. There is immense opportunity to innovate and provide real estate products that not only minimize their impact but perhaps even give back more to our ecosystems than they consume. Compared to traditional rental models and given the fact that shared living is already proposing a new way of living, the industry is extremely well-positioned to meet this demand.

7— Urban exodus and rural opportunity ⛰

We all know work-from-anywhere is on the rise to become the new norm. A wave of remote workers has increased demand for different locations – particularly outside of cities. This is a huge opportunity for developers and operators. Spaces in lower-density, rural areas are cheaper to build, meaning this benefit can be passed along to the users to offer something even more compelling and attractive.

Are you reinventing the ways people live and work today? Thinking to open or expand shared space?

We work with pioneering companies who are reimagining today’s habitats — and how spaces can be shared to establish more inclusive, resilient, sustainable ecosystems.

If you share this vision, we’d love to connect and build them together.

Connect with us here:

➞ hello@cutworkstudio.com