A profound lesson of the COVID-19 crisis is just how deeply humans care about connecting with each other. While quarantines, lockdowns, and social distancing rules have been introduced to keep people apart to prevent the spread of the coronavirus, these restrictions have also challenged us to discover new ways to interact.
One manifestation of this is the robust demand for co-living accommodations—a sort of hybrid of a home, hotel, workspace, and social-gathering place—both during the pandemic and as restrictions continue to ease. Social distancing has not, as many predicted, diminished interest in co-living. Instead, it has heightened it, as people long for the comfort and support of community amid all the loneliness and uncertainty.
That was a founding principle behind co-living, an idea that first attracted the millennial creative class and so-called digital nomads who were looking to connect with like-minded travelers and locals in cities such as London, New York, and Berlin for work or leisure travel.
With guest rooms, shared working spaces, abundant public areas, programmed events, and restaurants and bars, co-living ticked all the boxes for either short- or long-term stays, especially for anyone new to a city—and it quickly caught on.
This phenomenon has now evolved, with large-scale operators such as The Collective (for which I serve as strategic adviser and board member) having successfully modeled co-living at scale in the United States and U.K., and the market growing exponentially with players such as Starcity and Colonies. If anyone doubted it in the era of COVID-19, co-living looks to be here to stay as a way to live and thrive in urban environments.
Global real estate firm Cushman & Wakefield forecasts the co-living market potential in the United States and Europe over the next decade at $550 billion. As of August 2020, in the U.S. there were some 7,000 co-living beds available and more than 45,000 in the pipeline.
I believe investment and development in co-living will continue despite ongoing economic turmoil and travel disruptions. Here’s why:
For one, the ranks of digital nomads are growing. You could even say they’re going mainstream, as more and more individuals—especially in the wake of COVID-19—feel compelled to untether themselves from homes, apartments and offices, opting instead to live and work remotely for long periods of time.
Many of these nomads, attracted to the co-living community’s “home instead of home” proposition—compared to the hotel industry’s “home away from home” mantra—will take advantage of the expanding global network of co-living offerings in some of the world’s most dynamic cities.
Across the U.S., consumer demand for co-living has endured during lockdown, with enquiries rising 5% month-on-month from April through July, and exceeding pre-COVID volumes, according to Cushman & Wakefield. In the U.K., The Collective’s current overall occupancy stands at 85%, and renewal rates since July have ranged from 50 to 75% month over month, showing the strength of the offer post-lockdown.
While there’s been an outflow of city dwellers seeking safer living accommodations during the pandemic, I’m certain that cities will rebound and attract people—especially talented young people—looking for new opportunities, jobs, and inspiring communities.
According to Cushman & Wakefield, a predicted 89% of the US and European workforce will return to the workplace post-pandemic, despite a doubling of employees working from home, which is anticipated to reinstate demand for housing close to workplaces in global urban centers. Indeed, over 40% of new members at the Collective in London’s Canary Wharf neighborhood say that the convenience of being located in one of London’s main financial districts is among their primary reasons for joining.
Co-living continues to evolve, as it sheds the old notion of such accommodations as simply being glorified youth hostels or dorm rooms with bunk beds. Far from it. These days, co-living accommodations involve design-forward furnishings and studio apartments along with innovative events and programs—from rooftop yoga sessions to brainstorming with local entrepreneurs. Many even offer extras such as crafting workshops and coding boot camps (now such programs are provided digitally to comply with strict COVID-19 safety guidelines).
With a more mobile population and the growing gig economy, longer stays are part of an industry-wide trend. One of the fastest growing sectors before COVID-19, extended-stay hotels remained resilient during the initial lockdowns and subsequent travel curbs.
To imagine the future of co-living, look at the ways that hotels and home-sharing platforms have evolved. Instead of aiming for predictability, they have launched specialty brands that speak directly to a particular type of traveler, persona, or experience—be it in the luxury, boutique, business, budget, or urban hipster sectors.
Co-living operators will likely follow a similar strategy to meet constantly changing needs and broaden their appeal, for example, to older travelers as well as the 32 million Gen Z Americans who currently live with their parents or grandparents.
New models designed specifically for intergenerational families or LGBTQ communities will emerge—while others might appeal to personal interests such as sports or the arts. Buildings will be reconfigured accordingly, with the best gym and spa in town, nightly music performances, and play areas for kids within the facility.
Innovative hospitality companies have already upended the traditional idea that a home is a home and a hotel is a hotel, and that they’re mutually exclusive. As these complex and challenging times are forcing us to rethink how we live and work—and to redefine what community truly means—co-living will continue to be part of an exciting transformation.
Chip Conley founded Joie de Vivre hotels, was the Global Head of Hospitality and Strategy at Airbnb, and is the founder of the Modern Elder Academy, a school dedicated to helping people navigate midlife. He is also a strategic advisor and board member at The Collective.