More and more entrepreneurs are betting that urban apartment dwellers will gladly accept a few extra roommates and less private space as long as flexible leases and community involvement are included. Massive, New York-based coworking company WeWork, just told Fast Company that it quietly opened a new residential space over the weekend at 110 Wall Street in Manhattan with flexible leasing, an arrangement being called "coliving." Activities and amenities, including access to fitness classes, potluck dinners, cleaning and laundry services and a digital social network, all accessed and scheduled via an app, are included in the rent.
This new venture from WeWork—which boasts more than 40,000 members, locations in 21 cities and a $10 billion valuation—adds a bigger player to the nascent coliving industry, and suggests furnished, month-by-month apartments may be a lot more than a fringe concept.
Communal living isn't a new concept, but this business-oriented version led by startups offers a decidedly modern, sharing economy spin on the idea. According to a statement from WeWork, this is an early stage test involving 45 apartments in the building, which also contains some of the company's coworking spaces (if successful, the plan is to eventually house 600 people spread across 20 floors).
"We are in the early stages of beta testing a new, community-driven living concept in New York City," it read. "This concept is another layer of our platform focused on enabling people to live more fulfilling lives. During this testing phase, we'll be listening to feedback from our community and we'll have more to share in the future."
This coliving concept offers studio, one- and two-bedroom units, all fully furnished and wired with cable and internet (rent figures have not been released). Each unit will receive a monthly cleaning, and each floor features a common area and community manager who will plan events such as Sunday dinners, game nights, and fitness classes.
A new wave of amenity-laden developments, from Sky, a new tower in Manhattan to many micro-housing developments, are already trying to tempt the same younger demographic by offering more than a standard, anonymous urban apartment. But the addition of more flexible lease terms could make the arrangement much more attractive. According to a leaked investor pitch deck from WeWork, they see a big upside to developing the concept; the document forecasts $605.9 million in revenue from these types of residential investments by 2018, or 21 percent of the company's total.
WeWork's bet that these community oriented spaces will play to wealthier millennials comes after other, smaller startups have already established themselves in this space. In Brooklyn, Common, a coliving concept in Brooklyn's Crown Heights neighborhood founded by Brad Hargreaves, a co-founder of the computer programming school General Assembly, has seen success since opening its doors in October, and recently opened its second property.
"The way work is changing, it needs to be a little easier for people to move without a traditional 12 month lease," says Hargreaves. "We're creating that ecosystem."
Community management, and a focus on the user experience, is incredibly important for Common, he says. The monthly rent, which ranges from $1200 to $2000 a month depending on the size of the furnished room, is comparable to a studio apartment in the neighborhood, but Hargreaves believes he's offering a living situation that puts a premium on community.
"We're taking money we'd spend on private space and putting it towards community," he says. "I'm not sure if it's better or worse in a business sense (in terms of margins) than a traditional rental business, but the way we spend money and think about investing in the member experience is different than what you'd expect from a traditional landlord."
It is, however, a business that's expanding, suggesting that, irregardless of the size of WeWork's bet on this concept, there is demand. Hargreaves, who said he received 750 applications for Common, expects to open upwards of a half dozen properties in 2016, some of which won't be in New York.
"There's a housing shortage in major cities such as New York City," Hargreaves says. "We're excited for any other company to get into this space to start bringing more housing onto the market.'
· How the WeWork-CASE Acquisition May Change Your Workplace [Curbed]
· WeWork coverage [Curbed New York]