Exciting times in the Living Sector as housing takes centre stage. We recently hosted the launch of the BPF's Co-Living Report, unveiling the potential of this emerging market. Despite economic challenges, Co-Living is thriving amidst high interest rates, build costs, and planning delays. It offers a unique opportunity to overcome these obstacles and deliver on viability tests while increasing unit numbers. AG Planning Partner Marnix Elsenaar, chair of the BPF's Co-Living Working Group, shed light on Co-Living's distinct niche as "student accommodation for grown-ups" and its ability to establish itself in the market. Dive deeper into the article below for valuable insights.
New kid on the block - what is co-living?
Housing is very much on the agenda right now which is exciting for those of us working in the Living Sector.
The day after the Labour Party conference where Housing was front and centre, we hosted the launch of the BPF's new Report on Co-Living at our London Office which included a panel discussion.
Against a somewhat difficult economic backdrop where delivery of any housing, but particularly central London housing, has been impacted by a perfect storm of high interest rates, high build costs and planning delays, Co-Living is the exuberant and optimistic younger sibling to the more established BTR and Purpose Built Student Accommodation markets. Whilst they are "hanging tough" in this environment, these trickier times appear to be creating an opportunity for co-living which is more likely to deliver on viability tests and higher unit numbers.
AG Planning Partner Marnix Elsenaar, and chair of the BPF's Co-Living Working Group, introduced the Report and reflected on the journey to date. He noted some have described Co-Living as "student accommodation for grown-ups" or a "form of BTR" but that it's now very much finding its own niche. He added that we're now in the "second generation" of developments and that a typical Co-Living development would include individual units of between 16-27 square metres including a kitchenette and ensuite bathroom plus imaginatively designed communal kitchens and live/work areas.
The Report contextualises Co-Living and looks forward to the baby of the Living Sector (as Nick Whitten of JLL called it) unlocking much needed housing. Demand far exceeds supply and SpareRoom data from September highlighted that in London alone there were 22,549 people looking for rooms with only 10,833 rooms available.
It's interesting to identify who lives in a Co-living scheme and it's not quite who you think. Jermaine Browne (from Re: Shape Living) and Jane Crouch (from Fresh) both confirmed that this is not the confines of the young with Co-Living developments attracting a range of ages.
The key components that make it desirable are:
Affordability – cheaper than BTR and not much more expensive than an HMO. Perfect for Key Workers.
Quality – renters of the past could never have imagined having access to spaces like we now see in Co-living schemes. As brilliantly explained by Jermaine Browne, his younger self dreamt of a penthouse flat and in his Wembley scheme all residents can have a piece of that dream as the amenity space is housed on the top floor with epic Wembley and London views.
The spaces should provide the ‘wow’ factor that impresses the resident every time they walk through the front door. By bringing residents together and giving them the opportunity to form friendships and have those ‘Instagrammable’ moments, they will see the property as their long-term home and promote it to others.
Convenient – these developments are often right in the middle of our major cities.
Community – sharing spaces and doing things together with fellow residents gives a genuine sense of community
Flexibility – this is key, a short term place to lay your hat or a 12 month stay. Most stay for 12 months and stabilisation happens early too (good "sticky income" for investors).
Co-Living properties are all about the social spaces. So, it’s important that they’re comfortable, well maintained and welcoming for residents, whilst offering multiple opportunities for the Residents’ Team to utilise them for community events.
So what now?
The panel discussed how the London Plan Guidance on Co-Living, which is expected soon, will play a role in further unlocking this nascent market in the Capital and the hope was expressed that it will not be too prescriptive but provide a framework for the market to find its feet and reflect resident demand.
The Report advocates for the NPPF (National Planning Policy Framework) to provide active support for Co-Living schemes and to require local authorities to include an allocation for Co -Living schemes in their local plan.
To coin the original New Kids on the Block, clearly Co-Living has the "Right Stuff" to prosper and play its part in the housing crisis. Now the industry needs to work together to help lay the foundations for another success story like BTR.
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