This article was featured in the fourth edition of Coliving Insights, in the chapter Scale, make sure to download your copy here. If you are interested in learning what the subscription living models means for real estate as a whole, check out our previous article Why You Should Tap Into Subscription Living Now.
Your Life is already Subscription-based
Subscription services have been offered by businesses since before any of us can remember. Farms have been delivering fresh milk by horse carriage to neighbours in their village, and collecting their monthly payment prior to Jane Austen’s first book. Nowadays we can hardly spend an hour without using one of the multiple subscription services that we have integrated into our lives. Your mobile internet, gym, entertainment and public transport are all paid per subscription; even your fridge might be stocked via a subscription box. Whether you might have noticed or not, you have been living by subscription for years.
The convenience of a monthly payment and guarantee of delivery of a consistent, trusted service have been the qualities that made subscription-based businesses a source of value for users since the start. The model also provides something that most businesses would kill for: a recurring revenue flow.
The rise of the subscription economy took place mainly in the last decade; the phenomenon marks a change in consumption patterns that were heavily influenced by the disruptive power of millennials. The generation’s thirst for digital access to all sorts of personalised services and products, together with their narrow interest in ownership, made subscription-based businesses multiply in a variety of sectors. Today, beyond receiving milk and newspapers at your door, you can now subscribe to high fashion brands, jewellery, smart bikes and even underwear.
As we are incorporating an increasing number of subscription-based services into our daily lives, it is only a matter of time until subscription-based living solutions disrupt the coliving industry. To stay on top of emerging real estate innovations, it is crucial to trace new demands in the market and sometimes tweak your strategy to meet those needs. How, then, can the subscription economy be integrated into coliving models?
The Need for new Living Solutions
The demand for flexible living solutions has never been higher. Being able to move between different cities and countries while pursuing a career is a choice more people are asking for and taking everyday. For at least a decade, concepts like remote work and digital nomadism have been steadily increasing and the 2020 pandemic helped to push and spread these trends through every corner of the world. According to the Boston Consulting Group’s recent Workplace of The Future survey of over 12,000 employees, businesses already anticipate that, in the future, about 40% of their employees will follow a remote-working model.
Simultaneously, millennials and their incessant thirst for new experiences continue to disrupt the status quo of various industries, and by demanding living solutions that better suit their lifestyles, the real estate market is no exception. Their generation will not be seduced by competitive mortgage interests, acquiring assets through decades of monthly instalments or having their name on a deed. Millennials and Gen Z want to live in the now; they want to be free to choose, want a quick answer to their needs — preferably through personalised services — and demand a fast delivery of products and seamless online transactions.
If remote work, digital nomads, millennials and Gen Z are all seeking flexibility, access and experience, what is the living solution that meets their needs? As an innovation hub working within real estate, we are going to be putting our bets on the living solution that fulfils these demands: a hybrid of coliving and subscription-based living.
Scaling Coliving to Subscription Living
Coliving spaces already operate in a similar manner to a subscription service — but here the outcome/product for the user is a living experience service. Subscribers look for bespoke products and services that will improve over time; subscribing to a service creates a fluid relationship between users and a business. Most coliving operators have already established a relationship with the end users, so what can the subscription economy really add to their business model?
One way to scale up a coliving business into a subscription-based model is to provide more choices to users. Offering a property or location upgrade might be an interesting option to consider by operators with different targeted locations spread between cities and countries. This option also attends to the various life cycles of users. For example, families often need more space when having a kid, and less space when their children go to college. Having the possibility of more easily shifting between various living spaces enables people to follow their natural journeys in life without being bound to one place. Giving users the freedom to move out of an apartment they have outgrown or relocating to a new city hassle-free are benefits that can retain a customer potentially for a lifetime.
One of the great values of subscribers is that they are keen to add more services to their basic subscription once they get acquainted to and build trust in a service. In this sense, to enjoy the perks of scaling/adapting to a subscription model, coliving should consider how to make living easier for users in every possible aspect. Imagine a potential resident with a “services menu” at hand when considering a coliving property — what would they want to add to their living subscription? Furniture, a 50’’ flat screen TV, a storage unit, a car, a gym membership, weekly grocery delivery, nanny care twice a week, daily dog walks? For each ticked box, value is added to the user experience, making ROI increase while generating a predictable revenue.
More than providing easy access to various services and amenities, operators need to facilitate subscription to additional options that can be personalised. This would create a convenient and integrated living experience that gives users peace of mind to relax and enjoy their home, with the assurance that what they need will be delivered as they like and charged in one single transaction.
Another path for coliving brands to reap the benefits of the subscription economy is through an integrated platform of coliving operators, partnering together. Such a solution would require a network offering subscribers a wide range of living solutions spread across the globe. Users would enjoy the freedom and convenience to move between locations, without the need to break a rental contract or pay a new deposit. Being part of a subscription-living network would increase brand awareness and provide added value to each apartment unit, while maintaining each businesses’ autonomy and business model.
Hospitality Subscription Solutions to learn from
If you would like to continue reading the full article and discover how hospitality approached subscription living, click on this link.
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Originally published at www.spatial-experience.com.
