Coliving: A Pandemic-proof Investment Opportunity

Despite coliving being a relatively young business model, it has showed encouraging resilience during COVID-19, especially when compared with its sister- typology, hospitality. It is also hard not to notice that hospitality is currently a sector that is particularly affected by the negative economic effects of a pandemic - investors can therefore naturally move in search of other, more profitable areas of the market. Hotels are currently struggling to rebuild their pre- pandemic booking levels, but unfortunately it is absolutely impossible to achieve an occupancy rate of around 70% at the time being. Meanwhile, coliving spaces that were created as long-term concepts have a high occupancy rate and low rotation of residents. Finally, scale speaks for coliving. A large hotel facility is 250 units, while in the case of coliving, large often means up to 700-1000 units - often on the same sized parcel. All you have to do is multiply the rental rates to realise how much more of a profitable investment it is.

Absorbent Polish Market

Hospitality in the classical sense of the concept has been with us for over 200 years. It is a market that is saturated, scaled, diversified, categorised and highly regulated. Coliving is only at the beginning of this journey - especially in Central and Eastern Europe. How many hotel brands do we have on the market in Poland? I wouldn’t even attempt to count them. How many coliving brands do we have? You can count them on one hand! For many reasons, the demand for long-stay accommodation services on the Polish market is huge.

Until recently, private, commercial student homes did not exist - students could apply for accommodation on university campuses, but there was not enough space for everyone. Therefore, the majority of them rented private apartments - usually semi-legally. In addition, in a country that has been in a relatively high housing deficit for several years, finding a flat for rent is often a problem, especially in large cities, which are also academic centers. Looking at it from this perspective, a bright future awaits coliving in the Vistula river area, especially if aimed at young people. For example, according to the PIE (Polish Economic Institute) report, Warsaw is the second largest academic centre in Europe with 235,000 students. This guarantees that there will be plenty of people willing to use coliving facilities. Furthermore, the capital of Poland also has other investment advantages. It is still easy to find well-located, attractive construction parcels, and legal regulations regarding commercial construction are not as strict as, for example, in London. This significantly facilitates the implementation of large- scale investments.

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Building Brands From Scratch

Coliving will surely grow rapidly, but despite the clear gap in the market, investors must still bring a high level of quality, build a clear brand and consider market positioning. Competition will grow rapidly, and any negligence in this respect will have negative effects.

It is worth remembering that young demographics are much more aware and demanding as customers than previous generations. They value living in harmony with nature, personal development and education, seeking experiences, but also being part of the community and meeting others.

When we were creating projects for Student Depot in Gdańsk and Łódź, we designed them for such people. We focused on young energy, optimism, creativity and diversity. In these facilities we incorporated solutions such as a kitchen open to common areas, a forum for watching movies or sporting events, rooms for quiet work, open coworking spaces, fitness zones both inside and outside of the building, a library inspired by the interior of a workshop space, a roof terrace, and an open air cinema or basketball court. Such spaces should appeal not only to young people, but also to their parents, who often have a decisive voice in purchasing decisions and want to provide a high quality and carefree life for their children.

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Designing And Operating For Resistance To Epidemics

Solutions that help make a coliving facility “epidemic- proof” are not much different from innovations that could be recommended for hotels or offices. However, one should remember that coliving communities have a large number of people living (as well as studying or working) in a relatively small area. Coliving also differs from hotels or hostels in that it is a longer term home for individuals, not just a place to stay a few nights.

Just like in hospitality, proper hygiene procedures and certification guidelines for facilities must be created. However, in my opinion, this is a gap that can be quickly filled. Just as in hotels, regular decontamination and cleaning of surfaces in common areas, high air quality through appropriate ventilation systems or additions to them are needed. These additional elements can be an attractive extension of the service and a source of additional income for operators, as well as, for example, helping residents to maintain cleanliness in their private areas. The perception of coliving as a safe and attractive form of accommodation will also definitely be affected by food and eating habits. When rooms are equipped with kitchenettes, like in Student Depot projects, everyone can prepare their own meals, which in addition to the aspect of maintaining individual dietary needs (diets, intolerances, vegetarianism or veganism) also gives residents a sense of control over the safety of the meal preparation process.

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Common spaces are the most at risk areas. They should be sufficiently spacious, divided into zones that allow separation of communication routes and should enable residents to maintain an appropriate distance while moving around the premises. This means large lobbies, corridors, staircases and spacious elevators. Particularly in common spaces, the emphasis must be placed on the selection of finishing materials.

They should be durable, easy to maintain, clean, and tolerate frequent washing and disinfection. Glass, ceramics, laminates, metal, linoleum - these are all materials that can be used to prevent illness and contamination.

‘I would like to emphasise once again that I consider the current pandemic situation as an opening of a new chapter full of opportunities for coliving rather than a threat to this category of real estate investment.’

A further vital consideration is the elimination of the so-called contact points, or surfaces that are touched by a large number of people during the day (i.e. door handles, tactile fittings, light switches and interfaces in elevators). This means having doors and lighting controlled by motion sensors, sensory bathroom faucets and maintenance-free entry control systems. It is also worth emphasising the importance of air quality - an absolute necessity is efficient ventilation to ensure the filtration of pathogenic microorganisms to prevent the potential spreading of viruses like COVID-19.

Everyone who has survived quarantine in a small apartment is aware of what their basic physical necessities are. A place for cooking and storing food in every residential unit, a convenient place to work or study with a stable internet connection, ease of “supplying” or using shopping with delivery or pickup in a parcel locker, laundry located on site, etc. The ideal solution would be a balcony or loggia at each individual residential unit, and therefore the opportunity to spend time outdoors. If such a feature is not possible, common outdoor areas are important: terraces, rooftops and building surroundings.

There you can arrange a mini-garden, places for sports activities or just spending free time. All this will certainly make periods of isolation less burdensome for residents and make a facility designed in this way a friendly and safe place to live in the event of subsequent epidemics.

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Bright Future

To sum up - I would like to emphasise once again that I consider the current pandemic situation as an opening of a new chapter full of opportunities for coliving rather than a threat to this category of real estate investment. I think that investors may now prefer coliving - especially in the attractive and promising Polish market - over other types of real estate. However, it should be remembered that newly emerging spaces should be designed and equipped for the possibility of future epidemiological threats. It is also important to build a brand from the very beginning, consistently sticking to its character and aesthetic standards, as the coliving market may soon become much more competitive and driven by other forces (i.e. sustainability and health and safety) than the prevailing demand over supply.