No longer a novelty, co-working and co-living spaces are transforming Australians’ housing choices and work arrangements.
In the space of just nine years, WeWork has gone from an out-there concept dreamed up by two young American entrepreneurs to a company with a valuation north of US$40 billion and 280 shared-workspace sites spread across 23 countries.
Likewise, when the Australian Financial Review announced its 2018 ‘Fast 100’ list, “flexible office solutions provider” Victory Offices came in second. Since launching in 2014, it’s opened 17 sites throughout Australia. In fact, walk around any Australian capital city and it won’t be long before you spy a co-working space operated by Gravity Coworking, Stone & Chalk, Fishburners or Flux.
What’s more, although only in its infancy in this country, it’s entirely possible that co-living will take off in the way co-working has.
Co-living is already established in the US, UK and parts of Asia. Last year saw the hotel group Veriu open what’s been hailed as Australia’s first official co-living property in Sydney’s Inner West. Co-living facilities typically offer a small studio containing a bed, ensuite, table, TV and kitchenette, supported by larger communal spaces where residents can socialise and, as with a hotel, stay as long as they like.
Veriu and property-investment company Caper Property have flagged opening several other co-living spaces in inner-city Sydney suburbs throughout 2019. So what’s behind the movement, and what else is coming?
Millennials are location-fluid
Lots of social, technological and economic changes have facilitated the growth of co-working. Playing a part have been factors like the high price of urban property, for example, and information technology allowing greater flexibility with when, where and how work is done (and the rise of digital nomads). But what’s arguably most notable about co-working and co-living is how they appear to be a logical outgrowth of the burgeoning sharing (as opposed to ownership) economy.
It’s often observed that young Australians are less likely to own property or a car than preceding generations. Many don’t even own consumer goods such as DVDs or CDs, preferring to use streaming services instead. In the not too distant future, younger Australians could be flitting between co-working and co-living spaces in different suburbs, cities and even countries on a monthly, weekly or even daily basis. If that kind of rootless, unencumbered lifestyle becomes common, the effect on Australia’s economy and society is likely to be profound.
It’s not inevitable that co-living and co-working spaces will continue to sprout up across the country and the world. A high-profile cyber security breach, for example, could make business owners think twice about working out of shared premises over which they have limited control.
It may turn out to be the case that few Australians are actually willing to sacrifice space and privacy in return for affordable accommodation in a well-located co-living facility. It’s also possible that local or state governments will introduce regulations that make life difficult for co-working and co-living space providers.
But what’s happened so far in Australia, as well as in other countries over a longer time frame, suggests that co-working and co-living businesses will continue to enjoy strong rates of growth for the foreseeable future.
A report commissioned by global workspace provider Regus found that 12 per cent of all Australian commercial office stock will be used for flexible workspace by 2030. It appears inevitable that businesses of all sizes will be increasingly inclined to use co-working spaces rather than get lumbered with long-term office leases. (The growing popularity of pop-up shops suggests that even major global brands are growing wary of long-term real estate commitments.)
Getting in on the ground floor
Investing in co-living or co-working ventures currently requires significant capital. With the possible exception of WeWork, none of the global giants or local players looks like going public any time soon. (It’s similar to storage in that, while it’s booming, it’s hard to get exposure to the sector given most of the players are private, family-run companies.)
At least one foreign co-working company is now offering Australian business people the opportunity to buy franchises but there are currently no co-working or co-living real estate funds. Those wanting to make money from co-working or co-living have had to spend millions constructing or revamping buildings and then open them under their own branding. Until now, it’s been those with real estate expertise, such as hoteliers and property developers, who’ve been doing that.
But it’s early days and there’s still plenty of opportunity for blue-sky thinkers.