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Medici Living is on a big investment drive in Germany in a bid to become the WeWork of co-living. Here, its new vice president and head of global expansion, Philip Grace, who joined from co-working group, i2Office, which has since rebranded as Landmark Space and the UK’s third-largest provider of co-working spaces, tells REFIRE why our changing lifestyles are fuelling the need for co-living spaces.
REFIRE: Your aim is to operate co-living rooms in all major US and European cities, including Germany’s ‘Big 7’. What are your expansion plans?
Grace: We plan to add 7,500 beds to our current pipeline of secured and existing ‘Quarters’ beds of 2,500 by the end of this year. We already have 800 rooms secured or open in Berlin alone as well as a presence in most major German cities, including Frankfurt, Cologne and Stuttgart and we also want to really grow our presence in Leipzig. We don’t have a bias towards Berlin and look equally at opportunities in all major cities. That said, we could have 10,000 rooms in Berlin and we wouldn’t flood the market. Of the 7,500 rooms in our pipeline, around 1,500 are likely to be in Germany. Among them is the recently announced new Quarters in Berlin. With 226 new co-living beds, it is the largest Quarters development to date. It is located in the immediate vicinity of Berlin’s central train station and spread across two adjacent seven-storey new builds with a total GLA of almost 6,750 sqm.
Elsewhere, we’re starting negotiations in Paris, Madrid, Barcelona, Lisbon, Warsaw and Krakow this year. We’ll also be looking into Asia from next year on, firstly at English-speaking markets such as Singapore and Hong Kong. We’d like to add 3,000 new rooms in the US this year, although demand is there to add 10,000 new rooms in every major US city. In a next step, we’ll also be looking at emerging markets such as Mexico City or Mumbai, where it’s not always easy to find somewhere to live.
REFIRE: Given the success of co-working and co-living concepts, do you plan to build more spaces that combine the two?
Grace: Last year, Medici Living teamed up with flexible work operator Industrious in Chicago to offer a shared space. We operate 175 rooms and Industrious offers co-working on the ground floor. We’re under offer on an even larger building in DC with a commercial component and are looking at a similar concept in Europe, especially in Germany and the Netherlands, where people have a tradition of renting their homes.
REFIRE: How is the way we are living changing?
Grace:The way we are living is changing very rapidly. For example, millennials actually like living with other people. Even if they could afford to buy, many of them don’t want to be tied to a place like that. People want flexibility: they want a space where the rent, wifi and Netflix is all included – and that’s what we offer. Our clients are typically young professionals aged 25 to 35 who want to live close to work in a way that is affordable. In the recently opened Quarters in Berlin Friedrichshain, Medici Living is charging around €750 for a (monthly) membership, which includes a room in a shared flat, living room, and kitchen, access to the community spaces, bills, wifi and Netflix included.
However, I think there is a gap in the market to offer this kind of living to older people, too. When I’m retired I’d love to live with others in a co-living environment. People are living longer, retiring later and still have energy – we don’t want to be in a retirement home, sitting around tables playing cards. For our sort of concept, it doesn’t matter if you’re 25 or 75.
REFIRE: How do you expect your concept to evolve over time?
Grace: Our rental contracts are for a minimum of three months, with a rolling contract after that. We are constantly looking at add-on services we could offer, such as facilitating travel within our network. You could live with us in Berlin but be going to Beijing on holiday. That does not mean we’ll offer short-term rentals. We don’t want to become a hotel. But we can facilitate that kind of exchange with our app. We’re leveraging technology to create a platform – everything can be done via our app.
It’s like with Airbnb and Uber – at the beginning, people didn’t understand what they offered but now they’ve become mainstream. It all comes down to education. We’ve been doing this for seven years but co-living is still in its infancy and not everyone understands what it is. We have a lot of educating to do, to make cities understand that although co-living doesn’t solve the housing shortage it does help people find somewhere to live and provides a boost to the economy.
REFIRE: At the end of last year, Medici Living and Corestate agreed to invest €1b in the co-living sector over the next three-to-five years in Europe. At the beginning of this year, a similar co-operation was agreed with the W5 Group, the family office of Ralph Winter, to invest $300m in the US. Do you have plans for other collaborations like this?
Grace: We’re already talking to other market participants and will do business with institutions, other investors like Corestate, family offices or project developers. (ssk)
