Co-Living - The New Hot Real Estate Trend

By Christopher Levarek

The need for connection and community is primal, as fundamental as the need for air, water, and food.

- Dean Ornish

In a one of our first blog posts, “Three Reasons for Investing in Multifamily”, we discussed the growing need for multifamily properties based on the increase in demand from millenials, immigrants and senior citizens. Owning or a buying a home is being pushed aside for renting in a multi-family or apartment housing space greatly due this demand. Today, we outline the newest and growing demand for more then a typical apartment or multi-family rental. This growing trend or demand is for rentals located in buildings/properties coined “co-living” or intentional communities.

What are Co-Living Rental Properties or Communities?

“Co-Living” buildings are where people pay rent for a bedroom but then share common areas such as kitchens, living rooms and lounge areas. The rooms will be smaller then a typical apartment or flat but in doing so allow more space or communal areas for social activities and a deeper sense of community.

Some of the buildings, typically in larger cities such as New York or Los Angeles, even offer bunk beds in shared rooms by multiple people. One such offering is found with a company called “Podshare”, which is providing such rooms in San Francisco at around $1200 a month as reported in a recent CNN article.

Another such Co-living property is “Quarters” located in Chicago, operated/owned by Caton Commerical Real Estate Group. This property offers 175 beds which are fully furnished and includes all utilities at costs 20-25% less per month then standard rentals in the area. Other amenities offered include sheets, towels, maid service and free internet.

Why Co-Living?

Co-living properties or intentional communities address a growing need for the 21st century. With all the technology and social media, many are looking for a deeper sense of community and social connection to which these co-living properties satisfy.

According to Time magazine, “Intentional communities, by contrast, are intimate: a couple dozen apartments or single-family homes, built around central squares or common spaces. And they’re operated in ways intended to keep the community connected — with weekly dinners at a community center or other common area, shared babysitting services, shared gardens or games or even vacations. If you don’t want to participate, fine; no one will come pester you to play a pick-up game you don’t want to play or join a committee you don’t want to join. But when you need the community — because a spouse is away or a baby is sick or you’re just plain lonely and would like some companionship — it’s there for you.”

According to a Marketwatch article and CEO Khera of the co-living property company Node, “The younger generation of renters is looking for Instagram-worthy, full turnkey solutions for housing in an affordable way that embraces urban community living.” It is the convenience of the the variety of offered amenities providing similar services to a luxury hotel that draws renters in. The affordability factor in larger cities for shared rooms can also be an additional benefit, where such co-living communities offer similar pricing with better amenities when compared to traditional apartments. Some also choose these intentional communities for the available “shorter lease terms” which allow for flexibility to up and explore or travel the world.

What does it Mean?

With this growing demand and the shortage in affordable housing across the United States, this new trend for a communal type of living offers opportunity in the investment space. Whether investing in a real estate acquisition of an older building and transitioning the space into a “co-living” type property through renovations or passively investing in a new development project to meet this need, the opportunity is there.

We recommend ensuring the market is interested in this space. Look at the market indicators and statistics to ensure this type of offering would be a good fit for the chosen market. Offering this type of rental in a university town or retirement area could be very interesting whereas an area more aligned with families with kids might not do as well. Do the due diligence and ensure the numbers meet the criteria of a good opportunity for the target area. Look at some of the top providers of this type of property and see how they are going about creating these living spaces.

New trends represent opportunity and the ability to be part of something great however it is always key to understand and educate prior to jumping in with both feet. As always, Invest Smart!