Coronavirus turns collective living into business model for real estate firms

“When the coronavirus began we opened a WhatsApp group for all the building’s residents, all of us 65 or older,” says Rani, who lives in a small city in northern Israel. “We called the group ‘Good Morning,’ and its purpose was that by 11 A.M. each of us should send a message indicating ‘I’m here, I got through the night, everything’s fine.’ Sometimes it would develop into a cup of coffee together or a joint purchase of fruits and vegetables from a farmer, and sometimes it would be just a ‘good morning.’ For some of us it was the most direct human contact and the most joyous part of our entire day.”

Until around a year ago, there were encounters in the neighborhood that came about naturally and coincidentally at the local strip mall, at the community center or outside the local preschool or afternoon daycare program, without anyone having to devote much thought or effort to them. During the months of the pandemic, which significantly reduced time away out of the house and chance outdoor encounters, a sense of “community” was in great demand and made people jealous of those lucky enough to have good neighbors. But even those who weren’t so lucky reluctantly discovered that their neighbors had become their main source of daily interaction, and this turned tenant WhatsApp groups into primary resources for mutual assistance and social interaction.

This is one reason why over the past 10 months an old-new real estate phenomenon – co-living – has gained momentum in the center of the country. An increasing number of developers and contractors, who would usually wait for the Form 4 occupancy permit, hand the keys to the buyer and move on as fast and as far away as possible, are now investing millions of shekels to upgrade their buyers’ living conditions, and create local communities and partnerships that will continue even after the apartment is handed over. The increased interest of large real estate companies in providing communal services proves that the coronavirus hasn’t killed the collective – it has turned it into a business model.

“The corona[virus] months made us realize that our buyer doesn’t only want four walls and location, but worlds of content, a community experience and a feeling of belonging and identifying with the place where he lives,” says Ori Einav, vice president of sales for Acro Real Estate. “The world is progressing and changing, and so is the relationship between the developer and the tenant, which doesn’t end after the walk-through; it has to have more depth. We have to understand the needs of those living in the apartment we’ve sold them.”

That’s why Acro Real Estate is investing millions of shekels over the next several years in a cooperative venture with start-up Venn, which is operating in Tel Aviv’s Shapira neighborhood, in Berlin and in Brooklyn. Venn seeks to provide technological, physical and human services to apartment owners and other residents of the neighborhood so they can manage communal life.

In both its projects – the Golf project in Neot Afeka and Tel Aviv Yard in Neve Sharett – Acro will offer residents an app to communicate with the management company about problems or make other requests, but also communicate with other residents of their building or the neighborhood to launch joint initiatives, like joint purchases from suppliers, showing a movie in the park or holding a Pilates course in the tenants’ common room.

The app will also be anchored in the actual structure. Public spaces in the building will be maintained and equipped by Venn in accordance with the desires of the tenants. For example, the common room can be turned into a communal “living room” for socializing, or the company will rent a separate property that can be a warehouse for borrowing building equipment, a popcorn machine or a projector; or it could serve as a gym or treatment room for rent by the hour. These ventures will be based on the service provided by a community administration, whose job it will be to forge connections and produce initiatives or events that interest the residents.

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According to Einav, “The technology is meant to provide a meaningful response to the needs and desires of city residents. If in one tower they will ask us to hold a wine-tasting evening once a month and to bring Israeli winemakers with wines to sell, that’s what we’ll do. If in a second building we’ll see there’s a need to create activities for kids during the summer vacation, we will try to take residents’ desires and initiatives and provide a solution.”

During the first stage, Acro and Venn will finance the app and the physical services, including equipment and investing in the common spaces for the 370 apartments in the Yard project, and the 180 apartments in Neot Afeka.

“For a year and a half, we will invest in funding Venn’s platform for all the residents in the projects we’ve chosen, and the profit from our perspective is developing a reputation for projects perceived as ‘apartments people want to live in,’ apartments that have added value. We believe that most residents who become accustomed to the service will want to continue to pay for it themselves the day after as well,” said Einav.

After the 18 months, residents will decide whether to continue paying for the service, which will cost between 117 shekels to 230 shekels ($37 to $72) a month, not counting the additional costs of activities and initiatives decided on by the tenants. The assessment is that these projects will not be the only ones in which Acro will team with Venn, and that it will use the platform in other projects in the central region that have more than 100 apartments.

High-flown rhetoric – and higher prices

Venn, which was founded as an urban-community initiative to provide services and a collaborative platform for residents of urban neighborhoods, has been operating until now on a model of direct engagement with neighborhood residents – at their initiative – or a model of management services for the owners of small properties.

Residents of Tel Aviv’s Shapira neighborhood have had to cope in recent years with the complexities posed by Venn’s activity in the neighborhood. While the company has indeed encouraged community initiatives and encounters and has strengthened the feeling of community, it has also driven up prices and is perceived as introducing “outside control” to the neighborhood. Now it is starting to look like a more advanced version of the product, a service aimed at management companies and developers, as a tool for managing community services. Venn says it isn’t now pretending to set the tone, but is creating a platform for the residents themselves.

TheMarker has learned that other real estate firms, among the Africa Israel and Tidha, are examining whether to integrate Venn or similar services into their residential projects.

“Venn has engendered a perceptual change, and its ability to sell the urban communal life experience as a complementary product to real estate firms is our growth engine as a company,” explains Lianne Pollak-David, Venn’s vice president for strategy and business development. “This is a service about which the resident can decide how much he wants. The coronavirus has led us to consume most of our services at home, near home, or delivered to our home, and the building and neighborhood have become a workplace for many as well as the central focal point of leisure.”

Even if this is not “coerced partnership,” the phrase “management interface for an advanced residential experience” invites difficulties. For example, dealing with residents who live in the building and aren’t interested in the service; disputes liable to arise between those who use the service and those who don’t with regard to the use of common areas; activities in the lobby that might bother a neighbor who isn’t seeking a “living experience” but just a place to live, or renters who aren’t interested in paying for services but want to hold an event in the common room.

At Venn they say that residents who don’t want to participate in the communal events, don’t have to. “We encourage participation, but every resident decides on his level of involvement. All the events and content will take place at the residents’ initiative out of full consideration for the neighbors and the environment,” the company says.

Moreover, there are questions about privacy and information security, for example the information the real estate company will be receiving about residents through their collaboration with Venn, information that will accumulate on expenses generated through the app, or patterns of behavior relating to the use of the common areas.

The moshav example

Roni Cohen, CEO and partner in Eldar Real Estate Marketing, explains that integrating the concept of community in a real estate product has existed for decades in Israel, but it was more the privilege of moshavim and other self-contained communities. Now that the mixed-use principle has been instilled in so many projects, it is fomenting change even in downtown areas.

“The moshavim and local authorities where there were strong, well-off communities always enhanced the reputation of real estate initiatives and the developers benefited from them,” says Cohen. “But ‘community’ was a term more typically used to market and brand outside urban areas – in the rural areas and periphery, in the Sharon moshavim. Today we see that even developers promoting projects in Tel Aviv or Jerusalem, in which the location itself offers many advantages, are seeking to strengthen the community image.”

According to Cohen, “Many campaigns are stressing mixed-use, concepts of ‘being part of a community,’ and principles like ‘living where you work, working where you live, do everything with people like yourself.’ I think these ideas are being realized, not as a gimmick, in projects that where there is authentic mixed-use in the physical planning.

“When there is quality commerce on the ground floor, a lounge with joint workspaces, quality wifi for the residents and a gym with classes or community gardens for the residents, that’s the physical infrastructure for creating a community and taking inclusion another step forward,” she says.

Dror Ohev Zion, the CEO of Dara Project Marketing, believes the pandemic encouraged people to flee outward and buy one-family homes in open spaces, rather than seek densely populated communities in central cities. Nevertheless, he admits that “community is always a strong card to play when selling a project.”

He added, “The coronavirus strengthened the need for affiliation and community, and highlighted the broad social processes of alienation and loneliness that the social networks feed on. These strengthen the need for people to have real physical encounters with actual communities.

“Just as people can work from home or in a café, but prefer to go to shared workspaces in order to meet people, even in an era in which people can work from home more, they will want a platform for meeting people. I am involved with a project in central Jerusalem that is planning community gardens in advance as a tool for guaranteeing a neighborhood where there will be encounters between people. I’m also seeing more and more young couples who are choosing the periphery because there is faith in the community there, and not alienated urban life.”

Trial run in Harish

The Betzavta neighborhood in Harish, which will be populated during the next six months, will also be a significant test for whether the co-living idea can go from being a consumer product or empty marketing tool to a significant living experience.

The neighborhood is being built by Shafir Engineering, which won a government tender to build a complete neighborhood within 30 months, including public buildings, roads, infrastructures, parks, residential buildings and commercial centers. The company is in the final stages of erecting 86 residential buildings, and the branding that sets them apart from the many construction projects in Harish is the co-living idea.

“We asked people what they wanted in their neighborhood, and that’s how the plan for the neighborhood and also the co-living idea was born,” says Tali Cohen, Shafir’s vice president for marketing. “Unlike in other neighborhoods, there will be an events hall that will be owned jointly by the neighborhood residents, that only they will be allowed to use, for 50 shekels an hour, by booking through the app. There will also be co-working spaces, to be offered at a price of 15 shekels per half-day of work; a community store that will be sort of a trading post, a platform for residents who want to borrow camping equipment or trade books; a community garden, and even a food co-op that will compete with the regular supermarket chains.”

She adds, “Communal living spaces and joint ownership of assets is common in Scandinavian countries and other European countries, and we took these principles from there more than two years ago. To operate all the communal spaces, during the first year we will provide a community administration and an app, and after the apartments are occupied and people settle in we will turn it over to the neighborhood committee, which will decide how to manage it and regulate the joint needs.”

Obviously this will require the apartment owners to consume services that will cost them more than they would pay for an apartment and basic management fees. But Cohen doesn’t see any problem with this. “It means giving the resident more services at a more economical price for him,” she says. “I believe that someone who has near his home a workspace that takes money solely to cover operating costs, and the option of renting a trampoline from the neighborhood warehouse at half the price instead of paying double, and the same with making centralized food orders – will in the long run save on expenses and improve his quality of life.

“The coronavirus only highlighted people’s need to be part of something, after this distancing that was imposed on us. There’s a yearning to be together, to connect. The prices of apartments rose from 890,000 shekels for a 4-room apartment with a garden a year-and-a-half ago, to 1.16 million shekels today, and it’s also connected, in my opinion, to the fact that the buyers feel we aren’t just going to toss them the keys when we hand over the apartment, but will be chaperoning this community and – with the help of the physical construction, the app and the community administration – we will be creating the mutuality we all miss.”

Encouraging community

The collective idea can also be implemented on a smaller scale. In a project in the Ramat Gan neighborhood of Ramat Chen, Aura Israel has recently decided to turn the upper lobby into a co-working space that will include 12 workstations for residents’ use, along with a kitchenette, bathrooms and seating areas.

There is also the work of CommuniT, a company offering community services in a building in Tel Aviv’s Neve Sha’anan neighborhood. The company offers mainly young people rental apartments of varying sizes with private bathrooms and showers, alongside common areas like kitchens, living rooms and workspaces. According to the company, these allow one’s own small living room to “expand,” and provides the renters with access to equipment and activities that would not be affordable to each of the renters separately, thus encouraging and establishing the formation of a community.