collective live+work spaces
for people going places with purpose

Investing in coliving
with the Hub House model
real-estate development and hospitality having impact

Pitchdeck (PDF)

Should you be interested in investing please signup to the mailing list and we'll update when opportunity arrises. You may also reach out to directly to Jacob Jay, jacob@hub.house.

For consumer examples and details of the first candidate development locality please refer to our public crowdfunding proposition.

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Summary

Trends

Market

Offerings

Stakeholder models

Our model utilises a mix of these, which given a property's capacity and its stakeholder's expectations, the correspondence between allocations is adjusted. We are not however currently considering majority rental operations (>50%).

The larger the preference/rental allocation, the longer it may take to reach target dividend payments as market demand must grow to fill the corresponding rental capacity; this may however be offset with an increased marketing budget. In future once the community is established, this would not be an issue.



[we] foresee that one should be able to buy into a community-like neighbourhood in the future, sharing the financial costs, but also sharing the potential gain […] you could be the co-owner of a larger space, while only using a small piece of it privately, challenging the very definition of home ownership as we know it today
— An Educated Guess About the Future of Real Estate (Partech, Daphni)

Introduction

Much as coworking gave rise to community-based workspaces, coliving is doing the same for living spaces—both leverage and create benefits from their superior shared facilities, often at a lower individual cost than equivalent traditional approaches, and without long-term commitments.

Remote and location-independent work is ever growing and likely to reach a significant majority of the workforce in the coming decades. Online work frees many from the typical single-location approaches to both living and working, thus resulting in their needs being considered together for lifestyle 'geoarbitrage'—the selection of more affordable and novel locations serving work-life balance. These location-independent professionals are often termed 'digital nomads' although the segment includes many other classes of work other than online, such as fitness and wellbeing.

Such professionals thus seek locations from which they can both live and work for the mid-term, whether they do it in new location on an ongoing basis, or only as a retreat from their usual base, yet always with the purpose of connecting within communities around the world.

These hubs can also have local community impact, by virtue of drawing outside experience and knowledge to its locality and opening up opportunities between these 'remote' guests and locals also utilising the space, through ad-hoc and serendipitous exchanges, talks, workshops, and other programmes.

Despite this growing demographic such spaces are presently emergent (a few dozen) and equally split between multi-location brands or immensely varied independent 'lifestyle' operators. It is thus difficult to find trusted spaces to stay and use as a supportive base for work, from amongst these choices. Many potential guests and residents attempt to find apartment and room sublets, or pay the premium for booking on AirBnB. Both of which typically also require signing up for a separate coworking space.

Guest offer

Growth

Targeting 10 properties in 10 years with a valuation at €12m, from profits of €0.6m+/year, and funding of €2.5m. This timeframe could be reduced by bringing onboard an additional cofounder for field management of simultaneous properties during their development.

As demand increases the brand and its reputation can expand with a network of similar locations, to a much greater extent than competitors, utilising our low-overhead model that enables expansion without the significantly higher costs of metro operators (yet with the disadvantage of slower growth).

As the targeted professionals tend to move from one such space directly to their next there is a strong opportunity to leverage a network of spaces, maintaining the customer relationship throughout their journeys. There also exists a strategic opportunity with residential coliving operators in cities as a 'retreat' partner.

All these properties do however need extensive work and time to locate for a similar proposition. The model itself can be adapted to more expensive properties such as those in large towns and to new build, which would add variety within a network of locations and further strengthen customer loyalty. Or capital may be increased to reduce the time to market.

There would be no intention to operate at the higher market level to compete with other multi-location operators, thus prime city properties would not be considered unless subsidised by local government under redevelopment programmes, or should demand from an expanded customer base warrant locations in second-tier locations which present potential whilst being accessible to primary metros.

There also exists potential in some locations to develop properties with a focus on permanent residential coliving.

Asset release

As such real-estate models are asset-heavy, significant capitalisation remains in the properties themselves. We foresee a growing desire to own such facilities by the users themselves and as such expect to be able to sell fractional ownership across the network of properties, alongside permanent units in the form of 'cohousing'. This would thus enable locked up capital to be returned to investors, or for reinvestment in expansion.

Landscape

Operators target this segment with differing models. The first is not in direct competition and may even be clients for larger properties, these are the event-oriented operators (popup/ad-hoc, and subscription) from cruises several times a year (taking 400+ attendees), through year-long programmes that take their participants around the world every month (Remote Year having received 200,000 applicants, for programmes accommodating only 80) to popup villas for a couple of months (AirBnB's free 3-month remote-work sabbatical had 40,000 applicants in 48h).

The preponderant model is property operators, whom span a vast array from small apartments with only a couple of bedrooms through to repurposed hotels functioning as higher-end hubs. These are split between 'residential' long-term operators typically in major metros, and the 'destinational' short-term operators in vacation spots.

Comparatively

Our target is mid-season mid-term rentals at rates lower than typical metros and holiday stays. Employing significant seasonal pricing variation we create an opportunity to differentiate for those whom are more flexible whilst ensuring revenue across seasons. Most mid-market operators lack equivalence in specification, but do generally have superior locations (islands and cities versus semi-rural), we therefore position our ensuite rooms against their standard rooms and undercut by around 30%.

Some of the independent properties have strong dynamic communities and charge a corresponding premium for this, whilst the larger multi-location brands due to their scale and costs don't invest into their communities in the same way, leaving the proposition primarily focussed around their facilities. We plan to only use properties that support suitably sized communities, enabling us to scale whilst maintaining community, in this manner we may latterly increase our rates to further leverage this combination.

A semi-rural property makes for an accessible yet natural location. Whilst most other operators are in cities, with a mid-market price-point we offer ensuite rooms and an interesting countryside environment for balance. Such locations appeals to the demographic of city-based workers (now the vast majority of the world's population) whom seek to reconnect with the countryside, and can take their work with them for workations, but are sufficiently adventurous for a remote immersion.

Demand for more rural locations can but increase as fewer and fewer people have connections to the natural world, making opportunities to live and participate in rural activities desirable, providing it doesn't lack expected comforts and facilities.

Our rates versus other operators ensure that our offer is much more competitive for longer stays, providing increased revenue reliability. Furthermore the offer spans customer segments from budget to premium, accommodating many guest profiles under the one roof.

During an awareness building phase the rates will be further reduced, and latterly increased as market demand continues to grow. The rate brackets will be adapted per demand and to balance against potential revenue from secondary targets such as nightly tourism guests (B&B) during peak season.

Properties

Whilst metro-operators have great difficulty finding suitable properties, scouting more rural and suburban locations yields wide variety. Nonetheless those that are compatible with the model are generally buildings historically built as open plan factories yet retaining a local style, rather than more impressive chateaus and historic homes which are difficult to repurpose.

Industrial buildings are cheap to acquire but demand labour in order to redevelop. They exist within non-prime towns and villages improving the proposition versus entirely rural locations. Good internet is the second most important criteria and is rarely available outside towns. (In coming years this will not be an issue as low-orbit satellite internet becomes available.)

Competition

Due to the size of the market and its growth, and the tendency of customers to travel from one space to another, we do not consider other operators as direct competition. Each new operator increases awareness within the market and each has its own unique offer. To leverage this we are working to establish a shared identity and marketing efforts to reach our guests and residents.

Providing value through being a community-orientated hub requires that a space have certain optimal capacities, therefore we exclude both smaller and larger operators from comparison. (Offerings with 3 or 600 units are clearly of a different scope than an optimal community having 12–24 units.)

For a comprehensive directory of coliving operators visit coliving.community.

Impact

The model has a powerful role in redevelopment, providing strong incentives for professionals to remain depopulated and less popular locations by providing a hub space that dynamises and connects its visitors with local communities — through which opportunities can emerge, be supported and thrive.

The model also intrinsically supports UN Sustainable Development Goals. It enables diverse local and visiting participants to benefit each other through its shared space and ecosystem of exchange…

Social Enterprise Approach

Every community needs a space within which its members may connect, exchange and further their collective values.

An open and welcoming space that is also able to draw in neighbouring peoples and communities, greatly enhances its own capacity to then connect everyone together and generate serendipitous opportunities. Nowadays many such spaces are online, e.g. in the form of mailing lists and whatsapp groups… resulting in workers missing face to face interactions and connections, when working remotely.

The Hub House model provides for the redevelopment and repurposing of physical spaces with accommodation — thus having the capability to allow longer interactions, furthering relationship building and knowledge exchange amongst participants whom may not normally cross paths face to face.

Community Growth

A goal of the model is to expand the space's own community reach across multiple diverse locations, furthering the spread of beneficial ideas, skills and opportunities through the movement of its members amongst them, and in exchanges with local communities.

It is able to do this (if at limited pace) by generating revenue and reinvesting an allocated proportion of its profits for the development of new spaces and programmes as a social enterprise (or other similar form).

Assuming fundraising for a single property the first additional location would be possible in the 13th year after return of the original investment, or 8th with deferred return; each property then funding another around every 5 years (without dividends). This could be reduced utilising debt (mortgaging).

Community Programmes

The model includes inviting thought leaders and skill practitioners to share their knowledge, in the form of retreats or ad-hoc classes and interactions. This might be expanded for specific fields with dedicated programmes.

Some properties would adequate capacity to accommodate much larger groups, and host more than 50 in its events room with ample presentation area. Outdoor courtyard space (with weather adaptable capability) could host double this.

Community Commitment

Should the space be operated with a remit to provide facilities to a community through a profit allocation, doing so whilst offering the accommodation free to selected participants is possible — without an operations impacting revenue reduction.

Founder

Jacob Jay

Contact

This is a preliminary outline of a proposed project thus details are not intended to be a specific representation. jacob@hub.house

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