The trend of housing for the young demographic in America is moving away from large homes on large parcels of land. The trends are moving toward young people sharing living quarters (many out of pricing necessity). Many young adults are still living with their parents and grandparents for the same reason…..that’s a discussion for a later date.
First off, what is co-living anyway? Basically, it’s renting sleeping accommodations (bedroom) that are often smaller in size, with shared common elements (kitchen, bathroom, entry). Essentially it is real estate which does not have the traditional functioning parts. The typical one bedroom apartment has an entryway which usually has a coat closet, a living room, a kitchen, bathroom, bedroom, and a few closets throughout. For the average young professional those spaces are unused for over 90% of the day. Coliving units typically rent for 20-30% studio apartments in great locations, this is a compelling opportunity for all involved.
I would be remised if I didn’t mention that raising a family and kids isn’t really conducive to this business model currently. Young professionals who make that transition…. touch decisions must be made. Finding reasonably priced housing for this demographic in cities is still yet to be solved.
In New York City, the NYC Department of Housing Preservation and Development (HPD) announced a program to allow developers access to public financing to create more affordable housing in a co-living format. “Under the Mayor’s Housing New York plan, we aren’t just creating more affordable housing, we are looking for new solutions to meet the broad range of housing needs of our city. Shared housing has a long history in New York City and in big cities throughout the world, and with our new ShareNYC initiative we’re looking to reinvent, reimagine, and reshape this model into a dynamic new form of affordable housing for New Yorkers,” said HPD Commissioner Maria Torres-Springer. “We look forward to reviewing dynamic ideas from the development and design community that show thoughtful approaches for developing and managing these properties.” For the city, this solves a massive problem, how to create more affordable housing with the growingly limited resources and tools available. For private developers, this creates a new financing vehicle in a market where growing land costs and growing interest rates are making multifamily development less profitable. Opportunity Zone Funds are great but they don’t directly solve the two problems just mentioned. Depending whom you ask, access to capital wasn’t really a problem prior to OZ, but I digress that’s a discussion for a later date.
In London, there’s a company called Node. Node’s CEO says “Actually knowing your neighbors and doing things together — we have lost a bit of that in society,” he added about why people love co-living so much. Node is expanding into Toronto, Seattle, NYC, and LA.
In Chicago, Common has partnered with CityPads to create one of the largest co-living facilities in the midwest. It’ll be their third co-living facility in Chicago. The building will have rents starting at $975, including utilities, high-speed wifi, shared supplies, and amenities. Common prides itself in having “truly great living experience” and “excellent design”. Commons design philosophy goes on to say “We are architects, designers, procurement specialists, and construction managers. Each member of the team carefully considers every last element of our homes.”
In San Jose (CA), Starcity is seeking to create one of the largest co-living projects to date. Their solution is intended to solve the affordability crisis. Residents in their facility will rent their own rooms and share comment spaces (kitchens, living rooms, and bathrooms). Leases are for 3-12 months terms, including utilities, house cleaning, laundry, and other amenities. Rents will start as low as $800 a month. “The fabric of these communities is coming apart,” Jon Dishotsky, CEO of Starcity. “There’s low-income housing and shiny glass housing that only a few people can afford. Where does everybody else live? We want to make it affordable to those making minimum wage in one of the nation’s most unaffordable zip codes.”
In closing, it’s not a matter of if, it’s a matter of how will co-living change the way housing is created and modified in cities. There’s a great opportunity for growth to be a part of these ventures.
