Real Estate Developers Are Experimenting With Co-Living
Co-living, a style of shared urban residence, typically involves furnished apartments with communal kitchens and common spaces – and an emphasis on amenities and community. The advantages for Millennials include affordability, flexibility and ease of use. Not so long ago, a few startups like Common, The Collective, Ollie and WeLive by WeWork, started experimenting with applying the coworking model to housing spaces.
These companies are certainly in the real estate business, but their offerings come bundled with a philosophy of community, shared space and a built-in social life — and also nice furniture, pre-installed internet and TV service, distributed cooking, grocery shopping done for you, housekeeping and plenty of social activities. Think running clubs, yoga and happy hours.
As most of these startups are trying to stay lean and avoid the complexities involved with owning and developing a real estate project, they have partnered with more established developers and landlords, becoming de facto management companies operating on behalf of the owners of these properties.
Most co-living companies have yet to develop a highly profitable business model, and even WeWork has scrapped its expansion plans for WeLive. However, major developers like the Durst Organization and Property Markets Group have recently decided to jump onto the shared-living bandwagon and test it themselves.
Durst is reportedly testing the concept with a dozen co-living apartments at Frank 57 West, a 10-story building in Manhattan. Each of these units is just a bit larger than 1,000 square feet and includes co-living features like multiple bathrooms with doors that indicate whether or not they’re occupied.
PMG has launched a new division named X Social Communities, with about 5,800 co-living units in the pipeline and plans to include co-living spaces in them. The company currently offers 120 apartments in Chicago and has more in the works throughout the country, but none in Manhattan. “At the end of the day we control the process from soup to nuts,” PMG principal Ryan Shear recently told the Wall Street Journal. “From buying the land to creating the product.”
Mixed-Use Building in Downtown Santa Monica
As the co-living model continues to adapt, the various developers are taking different approaches to the implementation. Neil Shekhter, founder and CEO of NMS Properties, told me that he’s “identified the need for an all-inclusive and seamless style of living in Los Angeles and Santa Monica.” One of the largest developers in the area, NMS currently manages more than 70 properties in Los Angeles County.
“We’re creating a market of high-quality apartments in prime locations to renters looking for a unique experience at an affordable price,” he said. “With an insatiable demand for housing in prime urban locations such as Santa Monica, Westchester, Brentwood, Westwood, and other West LA locations, providing a luxurious apartment that fits consumers’ needs and budgets can be a difficult task. However, by embracing the full-service apartment model, the company is confident that it can provide high quality and all-inclusive furnished apartments at an affordable price.”
Over the course of 2017, NMS deployed 40 furnished units in LA County, and Shekhter plans to triple that annual figure each year for the next few years. The company currently manages some of the its properties while testing a pilot with Blok, a coliving startup, and plans to partner with other furnished housing and co-living providers in the next few months.
The Domain Companies, a developer operating in NYC and New Orleans, has recently announced plans for a $100 million mixed-use property in Salt Lake City. “Our concept expands beyond ‘micro-units’ or co-living,” said Matt Schwartz, the company’s principal. “While they share similar themes, we see this concept as an evolution of the early micro-unit formats. The apartments utilize creative layouts and furniture solutions to maximize efficiency and affordability.”
They may be significantly smaller than traditional apartments, but the units planned for this project are more spacious than typical micro-units. Studios measure 380 square feet, one-bedroom apartments measure 434 square feet, and they all feature full, private kitchens and bathrooms.
At the same time, the company has been significantly investing in enhanced amenity areas. “Our goal is to create a community where residents benefit from the affordability and social interactions found in the micro or co-living formats, but feel comfortable staying for the long-term,” Schwartz told me. “Further, the project is part of a mixed-use building that includes a 30,000 square foot location of our Shop co-working and accelerator platform and 3,000 square feet of retail at street level that’s designed as incubator space for small retail businesses.”
How do early stage startups feel about this trend? Brad Hargreaves, founder and CEO of Common, which recently secured $40M backing by NVP, is highly encouraged. “More developers entering the space means more partners for us to work with,” he said. “In the early days, education was a hurdle for us. Common needed to prove that our model worked just as well for new, ground-up projects as it did for our earliest renovation projects. Today, as more developers get on board with co-living, we have even greater opportunity to continue expanding our operations in new and existing markets.”
Source: Forbes.com / Omri Barzilay / 2 January 2018