Venture capitalists and entrepreneurs alike may have solved the squeeze for metropolitan housing, and it’s simpler than you think. “Coliving” is being aggressively targeted by the $16 billion shared office space provider WeWork Cos. and some other smaller companies hoping for viral returns. And it just might work.
“Coliving” is remarkably simple: it is an adult dormitory. In these prospective new residences, young professionals in their early twenties will live jointly severed lives in which they share all common areas, like bathrooms, kitchens, and living areas. While the idea is both revolutionary and controversial at the same time, it is gaining traction fast. Many of the most calculated companies, investment entities like capital fund Maveron, and Fidelity Investments are betting on rapid expansion and immense profits.
At the helm of the residential exploration is WeWork Cos., a massive shared office space contributor that is investing heavily in the “adult dorm” style development. WeWork’s expectations for “coliving” are enormous. By 2018, WeWork intends to have 70 locations with approximately 30,000 residents. In fact, WeWork’s investors suspect that by 2018, coliving will account for 20% of its revenue.
The idea seems logical enough; older people have retirement communities, the younger have dorms, so why not in between? As a matter of fact, the “in between” represents some huge opportunities. Currently, real estate data giant Zillow estimates that “the typical renter between 22 and 34 years old would have to spend 53% of his/her income to pay the median apartment rent in the U.S.” Which means spending far more than the recommended affordable 30%.
WeWork and others hope that “coliving” will capitalize on these kind of insurmountable numbers through a new approach on the premise that “less space is cheaper.