Business Irish

Sunday 25 August 2019

Co-living: A twist on shared homes of the past or a tired tale from the Dickens era?

The growth of micro-apartments has become a hot political topic, with experts warning they could reshape the housing market

Concerns are mounting over the costs associated with the growing appetite for co-living spaces in Dublin and beyond. Stock image
Concerns are mounting over the costs associated with the growing appetite for co-living spaces in Dublin and beyond. Stock image

Michael Cogley

Irish people have been sharing their homes with strangers for decades. Bundling together into a shared house can result in inhabitants securing better homes in better locations. It has worked for all sorts of people, from overseas workers coming to Ireland to students attending nearby colleges. So why, some developers ask, has a new style of shared accommodation - co-living - been hit by such visceral criticism?

Unhappiness with the housing crisis has fuelled the heated debates on the topic, say industry sources. The soaring cost of renting, matched with the unprecedented shortage of suitable accommodation, has led to frustration and anger. Adding fuel to the fire are the comparisons between co-living and the now-banned bedsits.

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Perhaps then, Housing Minister Eoghan Murphy should have expected the furore when he suggested that young people would be "excited" to live in such locations. Only on Friday, he had to backtrack on a description of co-living as like staying in a "very trendy" boutique hotel,

The first wave of proposals for co-living, such as one from Richard Barrett's Bartra Capital, which would see up to 42 residents share one kitchen, have come in for heavy criticism, with politicians describing them as "Dickensian" and "a glamorised version of tenement living".

But is co-living as a concept something pulled from the writings of Charles Dickens, or is it simply in line with the ever-changing demands of a population? Some operators would strongly argue the latter.

"Best practice needs to be demonstrated and I feel without a credible co-living developer and operator with a serious track record, it's difficult for people to understand," says James Penfold, planning and zoning director at The Collective.

Sharing accommodation has been a tradition in Ireland among groups of students and families. Stock image
Sharing accommodation has been a tradition in Ireland among groups of students and families. Stock image

The Collective is a UK-headquartered co-living firm that claims to be one of the international pioneers in the market. The group has around 9,000 units either in operation or in the pipeline across the UK, Germany and the US.

In January, the Sunday Independent revealed that The Collective had purchased its first building here in Fumbally in Dublin 8.

"We have something additional to bring to the table because we're one of the only companies who have been operating in the sector for 10 years, before co-living was even a term," Penfold says.

"We are a very different proposition; the projects that we take politicians to all over the world to see provide them with a high level of reassurance. We have a business of over 200 people purely focused on designing, delivering and operating co-living spaces across the world. Delivering our Old Oak building in London was hugely beneficial because we had something to show people, rather than tell them about."

The Collective and Bartra are not the only companies looking at Dublin. It was reported in these pages last month that German co-living giant Medici Living was planning to bring as many as 5,000 rooms to Dublin city.

Medici described Ireland as "a growing, dynamic, forward-looking and innovative country with a tech hub (Dublin), and at the centre of Europe". It also said it was a place that its tenants would be "very interested" in living.

Like The Collective, Medici's Quarters brand has a focus on quality. Its buildings can house anything from 50 to 300 rooms, but each kitchen is shared by between three and five bedrooms.

Elsewhere, Roam, one of the world's best-known co-living brands, said that it was "open" to setting up in Ireland, although it was critical of the "rushed" nature of the introduction of co-living here.

Bartra's efforts to get its developments off the ground have hit some planning stumbling blocks. At the start of the year, it was forced to refute a charge of "poor housing" levelled against it by Dublin City Council. The developer said that it was "strongly of the opinion" that its development in Rathmines in south Dublin provided the "greatest quality to the resident", and that it was 35.4pc larger than minimum standards.

Barrett's most controversial proposal, 208 shared living units on Eblana Avenue in Dún Laoghaire, is due to be decided upon in the first week of August. The development will see 42 residents sharing a kitchen, all expected to rent at €1,300 a month.

Bartra chief executive Mike Flannery says the scheme came in for criticism at the time of the European elections earlier in the year.

"It's important to say that there was a political context to this and that opposition parties used it as an opportunity to try and have a few words with the Government's policy on housing," Flannery says.

"The scheme has been designed with the intent to create as much activity as possible and to ensure that there was activity in the kitchen cooking areas. That means that you can't have multitudes of kitchens because, if you did, you wouldn't have the social interaction that people who want to live in these units want."

Flannery says the Eblana scheme was designed to give residents access to more people on their floor, not less. The chief executive also says the company's research suggested that it had provided "more than adequate" facilities for the number of rooms on each floor.

While much of the debate around co-living has discussed the rights and wrongs of living in a room that can be as small as 12 sq m, it is the hidden consequences of the model that have the potential to cause more disruption in the already dysfunctional housing market.

Take site values, for example, something that must be included in the build price of every house, apartment, hotel, and indeed shared living bedroom. Back in 2015, former housing minister Alan Kelly raised eyebrows when he unveiled his new "minimum apartment guidelines". They stipulated that one-bedroom units must be at least 45 sq m, almost four times the size of the minimum shared living room.

Architect Mel Reynolds says that the introduction of the shared living model will inflate land values even further and make "normal residential accommodation less viable".

"The financial modelling here suggests that the yield on shared living units can be a multiple of the rental income one could achieve from even upper-end residential units in similar places," he said. "Planning for these types of units would have an immediate effect on land values in the vicinity. Given the slightly lower build costs, similarly sized co-living schemes could generate two to three times more income than a standard residential scheme."

Similar concerns were shared by Sinn Féin's housing spokesman Eoin Ó Broin, who said the "biggest danger" of shared living was the effect it would have on residential development in an area. "The more I looked at it and the more I read about it in other cities, the more I thought that the concept wouldn't exist in a properly functioning housing market," he said.

"It is a consequence of a system that is so dysfunctional and, at the same time, there is a lot of money out there looking for a good yield.

"People are willing to pay more than what they should be for cramped accommodation, but it's only being provided because it is how you get the highest possible yield."

Industry observers suggest that where once a developer could build one apartment on 45 sq m, instead it can now build four shared bedrooms, each charging north of €1,000 a month apiece. But Flannery says that it is far from that simple. He says the obligation to provide shared kitchen and living rooms mean that direct comparisons between the two don't make sense.

"There is this sense that the price of land where you might be able to locate co-living is going to drive everybody else out of the market," he says. "It's not, because it's very much in the gift of the planners to decide whether or not a co- living development is appropriate in a particular location or not. One of the factors to bear in mind when they're considering it is whether or not it is preventing the development of other types of residential accommodation, such as apartments."

Flannery says there is a "natural brake" applied through the Government's guidelines.

Many of the best-known shared living facilities boast high-quality finishes inside, and part of their sell is a "community feel". Some developers sell it as a panacea for those suffering from loneliness when moving to a new city. The buildings typically have a curator tasked with keeping a buzz about the place by organising events or making sure people use the common spaces, which can range from gyms to work spaces, to in-house cinemas.

"Anyone who wants to be part of a community and feels a little isolated and lonely has the opportunity to move into a building and have human connection in the events we put on, run by experts across arts, culture, food and music. It's something different," Penfold says.

One such shared living company, Node, which is due to open its first Irish outlet on Fitzwilliam Square, boasts some of the best facilities available to residents. Node targets "globally minded, creative people who want to connect with residents both locally and globally".

The company has excellently furnished bedrooms with well-designed shared kitchens and seating areas, but they come at a high price. The two-bed Node room in Dublin starts at €3,350 a month, or €1,675 each. Node's three-bed offering on Fitzwilliam Square, which starts at €3,750, has already been fully leased out.

Another issue that has been raised is around the guidelines that underpin shared living. These state that the model has similar characteristics to student housing, which has undergone significant development across the country in recent years.

But Ó Broin says the open-ended nature of the regulations leaves them fragile. "Once this becomes a thing, then there will be a range of operators, and what happens when their business model changes?" he asks.

"There's nothing in the regulations I can see that stops them from changing their model. What happens when they stop investing in them? Who's going to live in them, longer-term? That's a consequence for everyone else."

Such charges are refuted by Flannery, who says that Bartra is obliged to provide a "15-year covenant to planners that it will continue to be operated as a co-living facility".

Reynolds offers criticisms of the regulations for being too broad. He says that the "concept" of shared living was introduced but that it was "very light on detail". The Dublin-based architect said that there was "certainly an argument" for designated single-person accommodation.

"However, maybe there should be a system of rating similar to the stars system employed in the hotel industry," he says. "There is a problem that developers are all being beaten with the same bat. A rating system should have been introduced by the Department of Housing.

"If you're getting a two-star room, you should be getting a two-star price, and developments could have different-sized rooms, the same as in a hotel. The guidelines introduced are a disservice to developers that are genuinely trying to come up with good-quality offerings."

While most would be willing to make a concession on living standards to pay less, the high price point of these units can make it a bitter pill to swallow. For example, a basic rule of thumb around affordability is that you should be spending around a third of your income meeting your housing needs.

Should you be paying in the region of €1,500 a month for such a unit, you would need to be earning almost €70,000 for it to be affordable.

Co-living is and will continue to make up a very small segment of the Irish housing market. While its small rooms with fancy finishes have caused considerable consternation up and down the country, we are likely to see a lot more of these homes come on stream in the coming years.

Dickens was famously descriptive of housing conditions in many of his pieces. In his first published work, Sketches by Boz, he wrote of "wretched houses with broken windows", with each room "let out to a different family".

So while comparing co-living to Dickensian accommodation may be a stretch too far, there are certainly valid concerns around the arrival of this latest form of shared living in Ireland.

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