With all the recent media attention on We Company’s IPO and speculation about the long-term viability of it’s co-working and other real estate endeavors, I used a recent NYC trip to book two nights at WeLive Wall Street to see for myself what coliving is all about and whether WeLive could be a meaningful business to help justify We Company’s lavish valuation ambitions.
Coliving for road warriors
Skeptics will say “Coliving” is just a new buzzword for the age-old tradition of splitting monthly housing costs with roommates. While there may be some truth to these claims, this latest incarnation has a more standardized, professional feel, the result of a VC-fueled property management brand behind the scenes coordinating the process of screening residents, designing space, and facilitating day-to-day living. Unlike a homegrown roommate situation you’d find on Craigslist, the coliving experience feels more like an extended stay hotel, a serviced apartment, or corporate housing with hip (for now) design and tech-enabled amenities, lots of communal space, and a schedule of regular on-property activities and events designed to encourage interaction between residents. Think of it as assisted living for urban millennials.
While working on my laptop in WeLive’s communal 9th floor kitchen (read my report on the alternative accommodations space), I chatted with Cassie, a 24 year old Australian native who just landed at JFK airport with two large roller bags and hopes of landing a job in fashion tech. While baking banana cake for her new roommates, Cassie explained the appeal of coliving:
“I have less than a month’s budget for housing before I need to find a job and I don’t know a single human in this city”
For Cassie, and presumably her roommates, WeLive solves many of the challenges of starting from scratch in a new city, affording her a private room in 3 bedroom apartment with background-checked, credit-worthy roommates. At ~$3k per month, WeLive is not cheap, but offers flexible lease terms and still costs less than a month-long hotel stay. And with modern furnishings, new appliances, and amenities you’d find at a 4-star boutique hotel, the overall value proposition is superior to what she’s likely to find on Craigslist or via an apartment broker.
Next WeLive offers a real-life social network. The Community Team organizes weekly happy hours, game nights, new resident breakfasts, family dinners, and other events and excursions to facilitate mingling and friendships. Finally, the WeLive format provides hyper convenience: access to shared work areas from which to punch up your Linkedin Profile, a gym, an outdoor terrace with bbq equipment & hot tub, and laundry facilities so you never have to leave the building.
Review: WeWork Wall Street
As a nightly guest, my WeLive experience worked well enough as an alternative to a traditional hotel. Would I stay again? Probably not, for the price I paid most hotels or Airbnbs in the area would have done the trick, especially since I wasn’t planning on doing laundry or cooking meals during my brief stay. Plus, as I got into my stay I felt more and more like an interloper as the format increasingly felt designed for those monthly residents like Cassie looking to form real connections with other residents instead of anonymous nightly hotel guests with little incentive to participate in the community.
Unlike most hotel booking web sites, WeLive needs to know whether you’re a hotel guest staying for just a few nights or applying to be a long-term resident leasing a room for at least a month.
As a “short stay” guest, you’ll be pushed into a generic booking path. WeLive uses a third-party system called Cloudbeds to power nightly bookings and the UX is pretty basic but it works as you’d expect. For my mid-week, two night stay, the cheapest option was a studio apt with Murphy bed for $244/night before the litany of NYC municipal taxes. The 4 bedroom was close to $600 / night before taxes.
WeLive hit my card for 50% of the reservation cost at time of booking as a non-refundable deposit, with payment for the balance due at check-in, similar to an AirBNB “moderate” cancellation.
WeLive relies heavily on texting to reduce front of house staff found at traditional hotels. Guests are expected to text the “Community Team” with any questions or requests as their isn’t a traditional “front desk” staffed 24/7.
That said, when I arrived around 7:30PM, there was a card table set up and a Community Manager staffed to look up my reservation, take my credit card for payment, and issue me my key card, and give me the lowdown on the hotel: where to find coffee, outdoor terrace hours, the various types of milk available in the coffee stations (oat, almond, soy). So despite all the pre-arrival texts, check-in felt like a makeshift hotel experience with an unexpected emphasis on the free selection of non-dairy milks.
Wall Street isn’t a neighborhood I usually consider when booking a trip to NYC but it ended up being fairly convenient for my short stay. Just a quick subway ride downtown from Penn Station and a 5 minute ferry over to DUMBO neighborhood in Brooklyn. Being New York, plenty of food and drink options were nearby and open at all hours. While this isn’t a part of town I’d go out of my way to stay in and could see it feeling out of the way for a longer stay, for the purposes of my quick trip it certainly wasn’t inconvenient and much less annoying than dreaded Times Square where chain hotels are concentrated and cheapest deals are usually found.
Since WeLive converts old office buildings into residences, most rooms are clustered on the perimeter of the building. My studio happened to have a partial view of East River. Furnishings felt modern and new, and overall I had no complaints about my room. It came with everything I needed and many things I didn’t (knives, plates, stove top, microwave, full size fridge).
Ample common space integrated throughout is the aspect of WeLive’s offering that most differentiates the guest experience from a traditional hotel or apartment complex. Each floor has lots of small sitting areas tucked away as well as dedicated shared space such as 7th Floor Terrace and Wellness Studio), 8th Floor Laundry & Game Room and 9th Floor “Great Kitchen”. Smaller lounges, kitchenettes, and coffee stations populate other floors, as you’d expect with an office building floor plan.
Conclusions & Data
While I left convinced Coliving is a “thing” that is here to stay and solves real problems for people like Cassie, it’s not obvious that We will find success in the category with its current WeLive product. Again, mixing nightly hotel guests alongside monthly residents seemed antithetical to building authentic community. Ideally WeLive’s would become private spaces dedicated to members only, however lack of demand from monthly residents, at least for now, has made welcoming nightly tourists from Ohio and Oslo an economic necessity for maintaining healthy occupancy rates. According to a recent Wall Street Journal report, WeLive seems to be moving in the opposite direction: increasing in inventory available to nightly guests at the expense of coliving members.
If this trend continues WeLive effectively becomes a “suite only” hotel where all the communal spaces and at-home amenities are less likely to resonate with nightly guests. Until it decides what it wants to be, WeLive will face heavy competition on multiple fronts: traditional global hotel brands competing for nightly guests with their popular loyalty programs as well as a whole new generation of other well-funded coliving startups.
More established co-living brands like Common and Ollie are focused on the format for urban residents while emerging lifestyle brands like Outsite, Selina and Roam are building community-based living experiences for travelers in leisure destinations, targeting the growing segment of digital nomads who spend weeks or months as transient residents of a global network of guest houses. Other branded accommodations operators included The Guild, Sonder, and Zeus Living are pushing short-stay accommodations catering to travelers with inventory embedded into local neighborhoods
Compare over 50 Alternative Accommodations brands.
Since my visit to WeLive Wall Street just a few weeks ago, these strategy and positioning questions are rapidly becoming academic as We contends with its immediate reality of investor mutiny and a core business that scales losses in lock-step with revenue. Regardless of WeLive’s go-forward strategy, significant cap-ex would needed for expansion, making this new venture an even greater burden on We’s profitability.
Compared to the core WeWork business which just requires desks, whiteboards, and some office equipment, launching a new WeLive unit requires each room to have a kitchenette, bed, TV and furnishings, not to mention the requisite customer acquisition investment needed to ensure heads in beds given all the aforementioned competition in lodging.
While there is room for many players and accommodation formats in a market as large and diverse as New York, it is unclear how WeLive becomes anything more than the current (dis)proof-of-concept given its parent’s existential challenges. A spin-off or joint venture with a more experienced, “pure-play” coliving operator seems like the most likely path forward while the embroiled WeCompany management team gets its proverbial house in order.