Reza Merchant founded The Collective in 2010 while studying at the London School of Economics. It began as an “agency” matching students with apartments but Merchant realised that “the only way you can impact the market is to create your own supply”. So The Collective became a developer of its own projects.
In 2015 the business launched its most ambitious property, a “co-living” space in Old Oak with over 500 rooms. Although it’s had its critics, the development has delivered proof of concept. Now, with additional investment, Merchant is taking The Collective global. We caught up with him to discuss the expansion.
Monocle: The Collective in Old Oak has had mixed reviews. Some claim the price and size of rooms aren’t competitive. How do you respond?
Reza Merchant: Average rents are about £1,000 [€1,150] per month but that includes gas, electricity, high-speed internet, linen, room cleaning and access to 20 or 30 events. It also includes gym membership and a co-working space. Once you deduct all those things, the rent is comparable to what you would pay locally. It’s good value. Also, about 60 per cent of 18 to 34-year-olds suffer from loneliness; it’s a problem. We’re creating an environment that solves this problem.
M: How will the company evolve?
RM: We’re building a global business. We have projects coming up in the US and Germany because the problem that we’re solving is not just a London one, it’s global. People don’t have good-value housing and there’s the problem of loneliness in all these cities. We see our product adapting for cities but the essence will be the same. It’ll be well designed and much more than just a roof over your head.
M: What are the differences operating in other markets? Are there cultural issues you need to keep in mind?
RM: The US has the most obvious differences. Expectations from consumers are far higher than they are in the UK. Even things like having a gym in a building: here it’s seen as a novelty whereas in the US it’s a given. When you look at unit sizes, they vary depending on the market, so in Germany there is generally not the same lack of space that you have here. In Berlin that will impact our unit sizes.
M: Why did you go to Germany next?
RM: You have five or six German cities where co-living will work. It’s also the most stable economy in Europe. Given the political times, a stable market is important. You’ve also got low costs of capital and financing with German banks. And a city like Berlin is so open-minded.
By Sabrina Toldt-Zimmerhofer
I moved into The Collective in 2017 and my one-year contract is about to expire (no break clause, of course). I really enjoyed being the first tenant in my en-suite studio. Everything was new: fresh sheets, gleaming bathroom and a fully equipped kitchenette. The 24/7 reception is invaluable. I have also grown to like the complementary activities and evening workshops, such as yoga and life drawing. When I first moved in I saw it primarily as an interesting housing solution. Over the course of my year I have socialised with an interesting mix, from tech start-up entrepreneurs to film-makers to single mothers to retirees. I think the principle of “co-living” can work and could be an interesting model for the future because it is based on fundamental human needs such as belonging, shelter and safety. However, The Collective could be better integrated into the neighbourhood. The all-under-one-roof concept is convenient but occasionally I would have enjoyed leaving the island to have my cappuccino elsewhere. And the main reason I’m not renewing my contract this year is the underlying transience that makes The Collective feel more like a stop than a destination.