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In the early weeks of COVID, there was extensive reporting on how the pandemic had accelerated the adoption of e-commerce and dealt a devastating blow to retail landlords. Now, at the lead of Twitter, Facebook and others, companies have accelerated shifts to remote work, with the potential to cause widespread disruption in the market for office space.
Given all the changes that the pandemic has caused us to consider, might it also affect where and how we choose to live? Will we experience a mass migration back to the suburbs and away from shared apartments?
Let’s take a step back and remember the trends that allowed for co-living to exist: the mass migration of young workers into urban hubs, the disparity between real estate prices and salaries, and the desire for flexibility and social interaction over stability and isolation. If I were to summarize, I would say it’s the growth of the cash-poor, experience-rich millennial generation.
Before going forward, I want to state that I am far from an expert on economics, sociology or urban planning. The predictions below represent my opinion on the information I have consumed throughout my career as a co-living space operator, my academic life and this current crisis.
Can we expect continued city migration?
In this environment, CEOs are reducing costs and saving up cash, and leases are certainly a target. The lockdown has reduced new demand for office space, and companies are using it as leverage while extending their work-from-home (WFH) policy until the end of this year or even into early 2021. If the current remote work experience turns out positive, executives will likely consider future growth without office expansions.
However, WFH isn’t a yes-or-no scenario when it comes to productivity, and only 12% of U.S. workers want to do it full time. The younger generation, and the professionals who aren’t measured by throughput, tend to do better with flex work arrangements. Flexible work will be widely adopted as a perk rather than companies completely giving up office space.
New offices will be designed to spark creativity and socialization, looking less like Foucault’s theory on disciplinary control. Teams will still get together frequently, and firms will keep choosing education- and innovation-driven urban hubs as their base. So I suspect new-grads will keep finding jobs they want in cities.
It’s unclear right now how many days at the workplace will be the “new normal.” Workers may take their two to four off days far from the city but still need a place in town in an effort to avoid lengthy commutes.
Past pandemics transformed urban architecture (subscription required), but the benefits of agglomeration in cities has always outweighed the setbacks.
Will youngsters be able to afford mortgages or rent after COVID?
It’s no surprise that homeownership isn’t one of the top priorities among young professionals. The reasons are usually delay of marriage, the convenience of renting or the inexistence of savings for a down payment – hard trends to bet against.
While a recession makes it even more difficult to project a deterioration of these motives, we are at a “circuit breaker” market because no one can relocate right now. We’ve experienced a radical imbalance between supply and demand in home sales, and while the current scenario is fluid, as social distancing ripple effects continue, it can lead companies into bankruptcy and further unemployment. Demand for housing would then plunge along with rents.
Do suburbs provide the social experience young people want?
The percentage of 25- to 34-year-olds who live with roommates increased from 4% in 1990 to 7.5% in 2016. Millennials are going through a “suspended adulthood” phase, delaying the moment when they start feeling that they should settle down like “real” adults.
This delay comes with the need for financial flexibility and on-demand services. No wonder younger generations are the early adopters of sharing economy ventures, from Uber to Airbnb and WeWork.
Millennials also look for other ways to fulfill their social needs. Social encounters are highly regarded and are much more frequent if barriers of distance and time are reduced, a major benefit of urban hubs.
What’s the future of co-living?
Unemployment will be harmful to every market, and it’s unclear how long a recovery will take. Yet, new jobs will continue to be created in innovation and education hubs, and more flexible hours will ensue as the new normal.
I forecast that housing as a service will have more and more appeal because these living arrangements reduce friction from moving, offer contract flexibility and allow tenants’ income to be spent on experiences rather than rent. It is a living product that can adapt to more flexible times.
The current scenario puts pressure on urban and home infrastructure, though. Co-living spaces need to step up their facilities to endure our new reality. Health safety protocols, restrictions on the number of roommates and spacious common areas become nonnegotiable, just like reliable internet, location and affordability already were.
Community professionals should also think about how they can create value and how to build a sense of belonging and trust among members, away from their go-to happy hour. Promoting empathy and positivity is key. An example is building relationships between members and local commerce: providing access to services that can be a lifeline while also helping businesses survive. Another example is promoting new connections between users, perhaps by asking them to share playlists, recipes, etc. and then matching them based on their tastes.
Co-living can indeed survive and adapt after the pandemic and continue to offer the lifestyle, structure and philosophy millennials are in search of. Times of hardship are known to foster creativity and to boost value-driven products. In the post-COVID world, a convenient community to live and meet like-minded people in could prove to be good deal.
