Volkswagen Immobilien was founded in 1953 as a subsidiary of the company in order to quickly provide company apartments in the young city. The rental housing stock today is around 9,300 rental apartments. Photo: VW Immobilien
At heart, it’s an old model: employees are offered housing in properties owned by their employer – at attractive rates and close to the workplace. This model was particularly popular after the war. Many mines provided such accommodation, as did Bayer and the German railways with their rail workers’ flats. Then, sometime in the 1980s, the model fell out of favour. Now it’s experiencing a renaissance, because good-value living space is more in demand than ever in congested urban areas.
Michael T. is just arriving home from work to an apartment building in the west of Cologne, Germany. The flat is newly renovated, 62 sqm – two rooms, kitchen, hallway, bathroom and a balcony with a pleasant view. His journey from the Cologne municipal utilities company – his employer and landlord – took just under 10 minutes. He moved to Cologne from Hanover specially for his job. He didn’t need the services of an estate agent. His new employer took care of the move too. And his rent of Euro 450, excluding utilities and services, has already earned Jens W. many envious glances.
But Michael T.’s experience is becoming more commonplace again, as – according to the findings of a study by Berlin-based consultancy institute RegioKontext – the trend for company housing has been revived. With affordable housing becoming increasingly scarce, the provision of employee accommodation can be a decisive factor, especially for companies that have to pay collectively agreed wages. Another benefit is that these flats are usually located close to the workplace. And a short commute also means more leisure time. A further argument in favour of company housing is that friendly relations between colleagues are maintained after work and employees feel more strongly identified with the company.
The proximity to the company premises and the provision of rest and relaxation opportunities for employees working in shifts are also important to the Cologne municipal utilities companies. Photo: Stadtwerke Köln
Following a boom that lasted from the post-war period into the 1970s, the demand for company-owned flats gradually waned in the 1980s. The housing market was under less pressure and rents were reasonable, leading to the closure of housing associations and the sale of residential property. But the situation on the housing market has changed since the mid-2000s, in particular due to increasing urbanisation. And so, there has been a move to modernise existing company housing stock and build new housing units for some years now.
As a consequence, companies are actually even relieving some of the pressure on the housing market. If they were to simply pay an accommodation allowance, that would create a spiral in which businesses would have to pay higher and higher wages so that their employees could pay the ever-increasing rents. Admittedly, in the case of company flats, there is an obligation in Germany to keep the Mietspiegel, or rent index, regulations in mind so that no monetary advantage is obtained through rents being too low. Nevertheless, these flats are usually geared towards the lower limits of local rents. The following examples serve to illustrate the success of employee housing.
Employee housing as an argument in favour of municipal companies
The Munich City Council recently decided to give preference to those applicants for commercial space who also offer company apartments. Photo: Stadtwerke München
The housing market in Munich is considered to be the most under strain of all German cities. Affordable housing is an extremely scarce commodity here. But it’s not only the inhabitants who are struggling with these high rents, organisations like Stadtwerke München are also affected. As an employer that is bound by collective agreements, the city’s municipal utilities company cannot keep up with the private sector in terms of salary. Attracting new employees requires new ideas – or old ones have to be rejuvenated. After all, the model for “Munich’s most recent near-work cooperative” is the long-established cooperative concept: what the individual cannot do alone can be achieved as a community. This means that cooperatives are an attractive alternative to home ownership.
In taking this step, the company would also like to help alleviate the pressure on Munich’s housing market in general. After all, profit is not a focus of this project. The prices are based on the local rent index and are therefore sometimes significantly lower than the cost of new lets. Flats are allocated in accordance with a number of specific points, taking into account factors such as social status or the income of the employees. The tenancies are linked to employment contracts, but retiring employees can still continue to live in Stadtwerke München’s flats.
In the course of renovation work on buildings from the 1960s and 1970s, the Bonner / Mertener Strasse residential complex was also successfully modernised. Photo: Stadtwerke Köln
Cologne’s municipal utilities companies have also been thinking along cooperative lines, although the history of their housing association, the Wohnungsgesellschaft der Stadtwerke Köln (WSK), goes back 55 years. While the success of the model continued until the 1970s, demand for flats among the organisation’s workforce declined in the 1980s. The current housing shortage and high rents in the cathedral city, coupled with the need for skilled workers, have led to a renaissance. Starting in 2013, the old building stock has been renovated and new properties added to the portfolio. Demand has returned – from well below 50 per cent, now over 85 per cent of the flats have now been assigned to the company’s own employees.
The availability of employee housing is seen as a factor in the competition for skilled workers by the Cologne municipal utilities too. Rents at the lower end of the rent index and the proximity to the workplace are used to attract staff, with the promise of a better quality of life thanks to shorter commutes and a reduced risk of accidents. In addition, the municipal utilities calculate that the WSK’s rented accommodation is thereby making annual CO2 savings of around 100 tonnes.
Carmakers as landlords
The living space offered by VW Immobilien is aimed at a broad target group: from shared apartments for trainees to spacious 5-room apartments in new buildings. Photo: VW Immobilien GmbH
Even in the relatively tranquil city of Wolfsburg, rents are rising steeply; a fact that has prompted Volkswagen to revisit the subject of company housing. At one time, VW Immobilien GmbH, which was founded in the post-war period, owned 10,500 flats, but its portfolio was partially broken up from the late 1980s when occupancy rates fell. More recently, the housing organisation has been building again. In the course of a municipal campaign of housing construction, VW Immobilien GmbH is actually now cooperating with the City of Wolfsburg authorities. While the lower and mid-price segment is mainly housed in existing properties, the new flats are being built primarily for higher income groups. With varied floor plans and high-quality fittings, they aim to provide an interim solution for workers returning from abroad, for example.
"Young living" in the greenhouse in Ingolstadt: The location close to the city, a bus stop on the doorstep and sports facilities nearby offer many opportunities for leisure activities. Photo: Florian Schreiber
Living space is also in short supply in Ingolstadt, where VW subsidiary Audi has its headquarters. Here, the carmaker has worked in conjunction with the Ingolstadt non-profit housing association (GWG) to convert a former office building into one-room flats with the name GreenHouse. The studios are currently rented for Euro 410 per month – fully furnished and including Internet and electricity. In comparison with other micro apartments, this pricing structure is certainly reasonable. Audi’s share of the accommodation in the GreenHouse is reserved for employees in apprenticeships, pursuing dual studies or undertaking other training. The length of stay is linked to the duration of the respective apprenticeship or further training contracts.
Employee housing – also a successful model outside Germany
With the Willow Campus, Facebook is planning its own town - not only with apartments, but also with shops, a pharmacy, offices, a public square and transport links. Photo: OMA
But it’s not only in Germany that more and more companies are turning to the provision of housing as a key to success. From Asia to America, good examples of contemporary projects can be found all over the world. In Japan, for instance, company housing has already found its way into the language and is called shataku. After the Second World War, the country saw the development of a culture of social provision. Around 78 per cent of companies with over 3,000 employees offer their own accommodation.
Silicon Valley, the centre of the global IT industry, is one of the world’s most expensive areas to live. In the last ten years alone, rents here have risen by at least around 50 per cent, which is currently throwing up major problems for Facebook, Google and so on. Even for well-paid employees, living space is gradually becoming too expensive, and it’s making the search for new employees more difficult. That’s why Facebook is planning its own district, the Willow Campus, which it intends to build alongside its company premises. In addition to 1,500 apartments, it will also feature public squares, shops and offices. The company aims to offer 15 per cent of the housing units at below market value. Google is planning to build 300 apartments as well – in a cost-effective, modular design– with the goal of addressing the high demand on the housing market.