Coliving—that housing typology for stock-image-looking, experience-loving, stuff-hating, taupe-upholstered-furniture-sitting, high-earning urban millennial professionals—is getting some serious attention from investors. A month ago, reigning champ Common raised a rock solid $40M Series C (making a total of $63.4M to date), and then last week, NYC-based coliving operator Ollie snagged a $15M Series A.
These investments are good indicators that coliving may enter the real estate asset class canon after all. For the last few years, this event seemed less than assured.
Some claimed coliving was for losers. Others pointed to WeLive as evidence of the model’s inherent flaws. If you recall, WeLive is WeWork’s Icarian initial residential outing, consisting of two retrofitted ~30 story buildings; their overstyled, overpriced units now appear to be packed with company friends, family, and “ambassadors” paying discounted rents. Others assumed that big developers would eventually make their own coliving buildings, cutting out the expensive coliving operator.
These recent investments suggest the detractors might have been wrong, and that the value-add these operators bring buildings goes beyond making a couple trips to West Elm and inviting tenants to a building-wide Slack channel.
Investors might see the long-term value in creating a cohesive, cross-building brand that people will trust and turn to for all of their housing needs—one that could theoretically move beyond shared apartments for singles. The Amazonian, own-the-customer-relationship model, might become a huge asset in years to come for the various operators.
The investors might also see coliving fulfilling a much more basic need: that for clean, furnished, utilities-included, shared rental units where tenants aren’t on the line for filling vacant rooms when one roommate decides to move in with her boyfriend.
Critics might say the only people who will bear the coliving premium (over Craigslist, for example) are fresh-from-Port-Authority-newcomers. They might (not incorrectly) argue that people who’ve been in town for a while don’t need to rent friends and can amortize the hassle of a trip to IKEA.
What those critics miss is the fact that cities have a never-ending procession of newbs longing for people to chill with, ones who don’t want to set up a ConEd account before they know where they want to land. While the actual customers who make up the coliving market might be fly-by-night, the market need is constant. The growing number of coliving operators and attendant investment dollars speaks to this market constancy.