Flex Living, a sub-sector within Living that brings together under the concept of flexibility the new temporary housing solutions, professionally managed and with services included, is experiencing rapid growth in Spain. The potential of this segment is based on a growing demand, which is looking for a housing solution that until the last few years hardly existed.
According to CBRE, since 2020 the number of beds has quadrupled from 2,000 to around 8,000 today. It is expected that 2023 will close with a stock of almost 10,000 beds. By 2025, Flex Living's stock is expected to double to almost 20,000 beds. Currently, 75% of the operational beds are located between Madrid and Barcelona. Other areas with a greater presence and projection of this type of assets are Valencia, Malaga and Vizcaya.
To find out the situation of the Flex Living market in Spain, CBRE has asked 21 national and international operators for their opinion of the sector. According to the Flex Living Operator Survey 2023, the future of this segment is in Europe, a market which, according to the stock of operators consulted by CBRE, will go from representing 36% of total beds globally at present to 57% in the coming years. In addition to the European countries, and in the opinion of the operators, Spain will be an important market for Flex Living.
Among the typologies with the greatest potential on the demand side is Corporate Living. Those consulted consider that a majority percentage of the demand (more than 80%) will be professional profiles, such as digital nomads, freelancers and corporations.
Flex Living groups together Coliving (developed on residential land in urban areas, smaller in size, with fewer common areas and amenities and a high sense of community), Corporate Living (located on commercial land on the outskirts of cities, with a larger size, amenities and common areas) and Vacation Living (on commercial land in coastal or rural areas, with fewer amenities but more common areas and also a high sense of community).
The data collected also shows that the average occupancy of these assets is very high, at 94%. The average rates are €922 in Madrid and €967 in Barcelona and the ranges are between €600-1,500/month in Madrid and €700-1,500/month in Barcelona. Prices are higher in Barcelona due to its more central location. The average duration of contracts tends to be between 6 and 9 months, followed by 3 to 6 months, according to CBRE survey data.
Time and contract flexibility and a wide range of services, at the heart of the value proposition
CBRE also asked operators which aspects are most valued by customers. Contractual and temporal flexibility and a wide range of services included in a community approach are factors that are increasingly in demand. Javier Kindelan, Head of Living at CBRE Spain, commented: "Flex Living comprises a series of typologies designed around the flexibility of their offer. We cannot ignore the fact that lifestyles have changed enormously in recent years, moving from a linear perspective to a circular and cyclical one. Plurality, mobility or the search for happiness and personal fulfilment have to be reflected in the supply of accommodation on the market. Flex Living sees accommodation, whether urban, semi-urban or holiday, as a flexible and accessible service, with a strong emphasis on amenities and advanced services and based on community.
Operators also put a special focus on sustainability. 62% of respondents consider ESG a priority in their portfolio. For their part, digitalisation makes the difference, considering technology as a decisive aspect to generate value for the user.
Evolution of the Flex Living market: investment grows and the sector begins its consolidation
In recent years, investment in this market has grown considerably, going from not being relevant in 2019 to the 666 million euros accounted for in 2022, according to CBRE data. In the first half of 2023, Flex Living climbed to the second position by investment volume within Living, with €240 million (15% of the total), with 69% of the total volume going to Corporate Living and the remaining 31% to Coliving.
In terms of operators' strategies, this is a highly fragmented market where consolidation has already begun. Operators are at an ideal moment in the market to be able to scale up, with two ways of doing so: vertical and horizontal integration. CBRE detects an increase in the interest of investment funds in taking significant stakes not only in operators at an advanced stage of growth, but also in other less consolidated operators with capital needs to expand.
