EC06: 2023 Year in Review, On the State of the Coliving Industry, and the Biggest Coliving News.

🔁📝Missed our last post? We broke down the connection between BTR and coliving and how it’s transforming senior housing. Check out EC05 for a detailed overview:

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2023: A Year In Review

Before we enter 2024, let's reflect on the year that just ended.

2023 was a significant year for the coliving industry.

It reignited enthusiasm in the sector post-COVID, showcased innovations and new concepts, and involved more real estate professionals. The year concluded with a high growth forecast, as we mentioned in our last newsletter, where many operators announced plans to double in size by 2024.

This occurred despite growing concerns over bankruptcies among real estate developers, high interest rates, and ongoing challenges in attracting new capital and interest to the sector.

2023 brought many changes.

💥 Here's what last year meant for us:

Coliving has proven to be a stable and worthy investment for institutional funding.

Operators weathered the COVID crisis (despite consolidations and bankruptcies, with some still not profitable) and have now entered a new phase of acceptance: the early adopters stage. As detailed in our last newsletter as well, traditional developers like Bouygues Immobilier with Nomoor Vinci with Bikubein France have launched coliving projects. These typically combine micro-units with shared spaces and activities. Asset-light operators have also grown, signing large deals that increase their portfolios by up to 50% in the coming year, as seen with Nodeand UrbanCampus. In 2023, the operator most in the news was Habyt,with its expansion to 30,000 units across 50 cities. This growth included the merger/acquisition of Common, the leading U.S. asset-light coliving provider with over 5,000 units, and a total fundraise of $41 million. Overall, coliving has gained credibility and is viewed with more curiosity and excitement for the upcoming year.

New concepts emerged, and operators diversified.

After solidifying operations and processes over the past three years, operators are now ready to innovate. For instance, LaCasa, known for its interest-based housing colivings, has expanded to shared living homes for young seniors, a model meeting great success. Many medium-sized operators (50-500 beds) have adopted a hybrid model of short and long-term stays, incorporating dynamic pricing for greater stability. Additionally, many aim to branch into medium-term corporate housing for a stable, high-revenue client base. The year 2024 starts with enthusiasm, and we anticipate many operators will announce their corporate offerings.

A stronger and more diverse coliving ecosystem.

And we've witnessed a growing desire for communal excellence.

2023 marked the first year when coliving operators truly aspired to achieve operational excellence and distinguish themselves through their brand and experience from their competitors. Previously, coliving operators were primarily focused on navigating the pandemic and concentrating on operational aspects, thus laying a robust business foundation for future years. This shift means that more established operators, now competing in the same cities, need to differentiate themselves beyond mere operations, investing in team and resident experiences. Companies today understand that long-term success requires mastering the art of experience creation and fostering strong, positive communal vibes across their properties.

📈 Looking forward to 2024, we hope to see:

New models around affordable housing.

From pod-based models to temporary family accommodation, all aimed at creating affordable housing in the public policy sense (defined as rent being on average less than 30% of the overall income per household, as per neighborhood).

Innovations in terms of design and architecture.

Much more interior design and architectural layout innovation is possible, especially concerning privacy and private needs in dense spaces. Plus, innovation within shared areas, such as Cutwork’s current study of how to design shared kitchens for 8-12 residents on average (think: water, cooking stoves, design, etc).

Offerings including (co-)ownership.

Allowing for the creation of housing models in which residents become owners of the real estate they inhabit (or shares in an associated operational company). Platforms such as hBitsand Stratain India are already making it possible for investors to own a slice of property. In the US, companies like Ownifyand Arrivedare making partial ownership, including dividends, accessible to many. In the UK, coliving entrepreneurs are creating new offerings where renters can build equity, and in France, Neopropriois making homeownership accessible by partnering with institutional investment and offering partial ownership yet full access to the property. Coliving is an ideal way to use and invent fractional ownership models - and we can’t wait to see the first successful case.

Scalable, bottom-up community models.

The operator becomes a platform and enabler of community by incentivizing talent, sharing, collaboration, and engagement. New projects such as the Node Creators Residencyattracting experts, athletes, thought leaders, and artists alike as event hosts and year-long residents, benefiting in exchange from up to 50% discounts on rent, event, and business opportunities. Other companies like OpenDoor have developed very strong community models with onboarding, community roles, and key community events - and have gone on to inspire other operators such as the LaCasa community model. Finally, we can also expect community models not limited to residents only, such as the creation of social clubs - a very hot topic of its own!

On The State of the Coliving Industry

We began this newsletter with positivenews: established and scaling coliving operators are now active in the market, there's a better ecosystem of service providers, and investor appetite is growing.

However , we also recognize that 2024 starts with significant challenges: high interest rates, a landscape of stalled coliving projects, bankruptcy among developers, and an overall reduction in investment.

This trend was evident in the news over the New Year’s break: some coliving projects are struggling to gain traction in 2024 due to high interest rates, as seen with this developer in Houston, Tampa and Phoenix.

Unfortunately, we expect more developers to face difficulties this year, as they seek ways to stabilize operations and secure more flexible financing options.

Coliving operators are also facing challenges. According to this report by the Financial Express, key Indian coliving startups are not in their best financial shape.

Yet, some have managed to adapt over the past year, for instance, by implementing a hybrid model of short and long stays, or creating niche communities, and are now looking forward to a hopefully more promising year.

Others have been successful in raising funds to extend their runway. The Indian coliving and apartment rental startup Settle recently raised more than 1 million euros (Rs 10 crore). The company collaborates with landlords to fill their spaces, often renting rooms and achieving 98% occupancy.

We also know that many operators have already secured their growth. And while interest rates are expected to remain high, there is a possibility that housing prices will decrease in both rental and acquisition markets, as is already being observed in Berlin.

While 2024 won’t be an easy year, it will undoubtedly strengthen the most serious operators and spur them to innovate in order to meet both market and investment demands.

Some Of The Top Questions From 2023

We extend our thanks to everyone who participated in our coliving webinars! As part of our routine, we always ask participants for their #1 question. Here are some of the most frequently asked questions of 2023:

• Can a small (12-unit) coliving project be financially attractive? How can boutique spaces hold their own against larger competitors?
• What are the main KPIs to consider? What is the recommended all-encompassing PMS software for large coliving buildings?
• What are the top 5 trends in coliving? Which niches hold more promise?
• How do you attract and screen the right customers? What are effective marketing strategies for tenants before construction completion?
• What key services can significantly improve the residents' experience? How can design enhance community interactions?

If You Should Read One Article from 2023, It’s THIS!

What exactly is coliving in 2023 truly? This article provides a comprehensive overview, from the introduction of new shared housing terminologies to authentic insights from TikTok residents and emerging "co-buying" trends.

It offers a stimulating exploration of the current state of coliving and its future direction. Read it here.

Enter 2024 With Our Word of January:

Bleisure

In this concise and informative article, Suresh Rangarajan, CEO of India’s Colive, which manages over 20,000 beds, shares his insights on hybrid hospitality. He emphasizes the vibe that the “modern coliver” seeks: bleisure.

“Hybrid Hospitality redefines the traditional hotel experience by catering to the rising trend of ‘bleisure’ travelers - those who blend business and leisure elements into their trips. This involves transforming hotels into dynamic spaces that seamlessly integrate work, relaxation, and social interaction.”

We appreciate this definition of “bleisure” and how it establishes the foundation for any coliving-focused accommodation: creating spaces for work (creation), relaxation (solitude), and social interaction (community).

Discover ways to incorporate this vibe into your space by reading the full post.

Adam Neumann’s Flow Opens Its First Location

The long-anticipated concept by Adam Neumann, which secured a $350 million investment from Andreessen Horowitz in 2022, has finally opened its doors, offering a sneak peek into the coliving startup.

However, the excitement surrounding Flow’s potential to revolutionize fractional ownership is waning. As the article notes:

“Flow appears to be concentrating on a less innovative approach: managing buildings that tenants love to live in. The startup aims to foster a sense of community among tenants by organizing events and fitness classes and learning more about their preferences.”

The article further highlights the uncertainty around Flow’s method of sharing value with tenants, as initially promised by Neumann. This could involve a points system akin to airline miles or credit card rewards, or plans involving incentives and/or shared ownership for residents.

The exact details remain unknown - only the future will tell whether this time, Neumann is able to live up to his storytelling.

Disney is Developing Its Own Coliving Village

Yes, Disney is venturing into residential offerings, aiming to create interest-based communities.

Among its planned features is “enrichment programming,” which includes unique experiences like storytelling dinners inspired by Disney films, workshops with Disney artists, and family fun days filled with Disney-themed activities.

As mentioned by Disney: “These master-planned, new home communities are designed to inspire residents to foster new friendships, pursue their interests, and embark on the next exciting chapter of their lives — all while experiencing the meticulous attention to detail and special touches that are Disney hallmarks.”

In addition to the 4,500 units in this project, Disney is also undertaking the construction and operation of a new attainable housing development with 1,300 units. This housing complex aims to provide affordable housing options for those within certain income levels, including employees at Disney’s nearby Magic Kingdom theme park in Orlando.

Disney is actively involved in the design and construction phases of this project and has partnered with The Michaels Organization, the largest privately held owner of affordable housing in the United States, for this endeavor. Read more here.

And Everything Else Coliving

• Coliving.com is on the lookout for a co-founder and Head of Sales. The platform, established for over half a decade, has been managed with strong intentions. For more details, check out this post.
• The Empire Residence, a new hotel-coliving concept in Bangkok, is now open. It caters to both short-term business travelers and long-term residents.
• Discover the top trends in travel startup funding with Skift’s latest insights. There's a significant focus on short-term rentals and hotel technology, covering software products and services related to property management, pricing and revenue strategies, guest communications, and kitchen operations.
• Vitápolis, a coliving space designed for seniors, has been awarded the APE Grupo Architecture Award, recognizing its innovative design and approach.
• In Washington, ongoing efforts in housing legislation continue, with current considerations to legalize SROs (single room occupation). This move could pave the way for more (affordable) coliving options

Want to be featured in the next newsletter? Tag #everythingcoliving on LinkedIn or Twitter for us to find your company updates!

That was a lot! We hoped you enjoyed and welcome back into 2024!

Wishing you a great start of the year,

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🆕 Up next, we’re diving into...fundraising trends and home ownership in coliving with EC07, followed by design innovations in EC08.