I’ve never been a fan of the “sharing economy”. Not that there’s anything intrinsically wrong with Uber, Airbnb and their peers, it’s just that there doesn’t really seem to be much “sharing” going on. It’s more like adding a technological middleman to a rental market.
Now having shaken up the taxi and hotel market, the sharing economy has its eyes on a new market: housing for the digital workforce. This time it may have gone too far.
Leading the charge is WeWork, a company that has turned the yawn-inducing business of leasing office space into a $10bn valuation by trendifying the office experience and attracting like-minded businesses to “share” its spaces. Sounds so much better than a lease, right? (Full disclosure: the Guardian’s New York office is in a WeWork building).
The strategy has paid off for the startup real estate company. It is now bigger than all but the three largest publicly traded office management firms, if only in terms of the value its investors place on it: it manages only a fraction of the number of square feet of office space.
Now WeWork is betting that its new business model, WeLive, will generate some 21% of its total revenue, or $609.8m a year, by 2018. There are a couple of giant assumptions underpinning that forecast, beyond the obvious one that the world of venture capital and the startups it has funded, including the giant “unicorns” (private companies worth more than $1bn), may not remain in robust health.
Even if the startup universe enjoys a blockbuster year in 2016, though, there are a few other considerations. First, the residential real estate scene in cities like San Francisco and New York is notoriously difficult to navigate economically, even if that’s the very reason fueling some of the potential demand for WeLive and other co-living/co-housing solutions. More seriously is the question: to what extent will workers be content, long term, to be presented with these worker dormitories as alternatives to affordable independent accommodation?
Within the technology universe there clearly will always be a subset of geeks for whom the line between work and life doesn’t just blur, but never really existed in the first place. For them, being able to bunk in a micro-apartment conveniently located perhaps only a block or two away from their office, in a space where everything from cleaning to bill paying is handled on your behalf, is the answer to a prayer.
At the other end of the spectrum are wannabes, those drawn to fast-growing cities and who hope to network their way to better jobs. Realistically, the amenities on offer in Brooklyn in the first shared living space to be opened by Common, another co-living company (backed by blue-chip venture capital companies like Maveron) are a lot better than those you’d find in a typical college dorm. The rental rates, at $1,800 to $1,950 a month, are affordable relative to the cost of a Brooklyn apartment when you consider that utilities, basic furniture, and basic supplies (salt and pepper, cleaning stuff) are thrown in.
But if you move into Common, you’re not getting an apartment – just a single bedroom, which is only 100 to 150 square feet. The mattress may be a Casper, but that’s still tiny. For comparative purposes, the median size of a studio apartment in Manhattan is a whopping 550 square feet, and to rent that, you’d pay on average about $200 a month more, although you’d have to hunt around. (Of course, you’d be paying for your own paper towels, and have to bring your own furniture.)
From hacker hostels to luxury accommodation, however, co-living offerings are thriving – as, it seems, are the number of millennials willing to pay a premium price for the ability to connect with one another in what can feel like frenetic, large and overwhelming cities where everyone is focused on work.
Companies like Krash and Pure House are profiting from this wave. Some offer meditation classes, others potluck dinners and networking opportunities. Wi-Fi is a given, as are granite countertops in the kitchen spaces. It’s as if the boarding houses of the early industrial era and legendary residences like Manhattan’s Barbizon Hotel for Women got a 21st-century high-tech, high-gloss makeover.
What they all have in common, however, is the cost. Each of these companies lives in hope of becoming the next high-growth success story; to do so, it must reap a big profit from those millennials renting rooms.
Previous generations of young hopefuls moving to the big city and sharing accommodations (throwing up temporary walls to divide a studio into a one-bedroom apartment or creating an extra bedroom out of part of a living room) did so in order to save money, whether to put toward a down payment, pay off student loans or simply to spend on vacations. It’s hard to see how they can accomplish that these days, if they opt for these co-living units. The cost is carefully calibrated: certainly cheaper than rental units (and more available, especially in some markets, like San Francisco, where there is a dramatic shortage of affordable rental housing) but still far from inexpensive, especially for someone in their 20s just starting out.
Then, too, the profit motive has driven some to cut corners. Consider one San Francisco co-living arrangement offered by Vinyasa Homes Project: $1,800 for a bunk bed in a small shared room. It’s not as bad as it could have been; the tenant who went undercover on behalf of a Bay Area television station to check out the shared house (with 30 housemates) found that some rooms had four roomies in two bunkbeds. At least the kitchens were well-stocked, she reported.
At their best, co-living and co-housing arrangements can be wonderful options. I’m not sure that when tenants are desperate to find some kind of place to live and turn to hacker dorms or other sharing options as alternatives, as they increasingly do in cities like New York and San Francisco where cost and availability of rental housing are big issues, this is going to be the best case scenario for many. Even if it’s cheaper and more accessible, that doesn’t necessarily mean it’s optimal, and certainly city governments can’t assume that this is a model that will come close to solving an affordable housing crisis for millennials.
Then, too, I can’t help my mind flitting back to the old Dickensian image of the workhouse. You lived and worked in the same place, and you worked in order to earn your keep. With the gap between work and life narrowing to a mere sliver – one advocate of co-working and co-living studied a Chicago design, involving a glass wall in the bedroom that could be used as a whiteboard for work during the day and a screen on which you could screen the latest Netflix drama at night – are we heading toward a deluxe, 21st-century version of a workhouse where technology employers can call on our services night and day?
There are plenty of human arguments in favor of sharing our living arrangements, but it should be those, rather than the need to network, to save $150 a month, the inability to find an affordable alternative, that dictate the decision to share a house or an apartment in our 20s, 30s, or – for that matter – in our middle years or as seniors. It should be a voluntary association – as should the selection of our housemates – rather than driven by the economic interests of our employers and the financial incentives of the companies trying to justify a 100% jump in the value of their company in less than a year by commanding big rental fees.
The sharing economy may just have its limits. The extremes of co-housing, such as sharing a single small bedroom and two bunk beds with three other people, may turn out to be one of them.