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Can Coliving Help Solve the Urban Housing Crunch?

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It’s been compared to dorms, fraternities, and the Real World house, but many investors also believe coliving is part of the future of urban living

Two years ago, Joey Plunkett faced the same situation thousands do every month; making a move to New York City. After finishing grad school two years ago at St. Andrews in Scotland, Plunkett decided to make his mark in Manhattan, attempting to get the startup he co-owns, BugSplat Software, which reports user crashes for bigger software companies, in front of a bigger, more lucrative audience. Outside of bringing his job with him, the 26-year-old faced the same hurdles that makes every NYC transplant bemoan their arrival; finding and applying for an apartment, and surviving the maze of security deposits, broker fees, and roommate pairing that process entails. And that’s only the start. There’s navigating the city, figuring out a social life and routine, and other challenges common to any big city move. But, as befits the startup mentality, Plunkett found an alternative solution.

He applied for room in the then-new Krash space, one of a network of shared living spaces that’s part of the nascent coliving movement. For a monthly fee (he didn’t remember the price, but it was a markup from getting his own apartment), Plunkett moved into a space in Manhattan’s Murray Hill neighborhood with a group of fellow tech entrepreneurs and coders, all living in their own bedroom with shared common area. Plunkett found everything laid out, he says; furnished apartment, no long-term lease, and most expenses, such as utilities, included in his rent. It was the easiest move of his life—what he called "turn-key"—and all he brought was a pair of duffel bags. He said it allowed him to move to New York without the risk.

His roommates in the Krashpad spanned industries and ages—a group of coders, founders, even an architect, ranging from their 20s to 40s—and shared group experiences, including common dinners and speaking events with local investors and CEOs.

"It’s like the Real World house for entrepreneurs," he says. In a common space decorated with chalkboards, Nerf guns and guitars, he would work with others from his industry who became friends (he still texts them with business questions to this day). If he was moving to, say, San Francisco, he’d definitely live in Krash or a space like it.

"I absolutely think this model can be bigger than coders," says Plunkett. "Airbnb broke down the idea of living in a space that’s not your own, basically normalizing it. With rent going up so much in urban cities, this make sense."

Coliving spaces aren’t brand new. Spaces like Krash, especially in the tech world, have existed for years, and some argue that the basic concept—private bedrooms and shared living space—is almost as old as the idea of being a young adult in a city. But recently, coliving has started to grow up. From Common, a series of coliving spaces in New York to WeLive, a new venture by the massively successful coworking company WeWork to enter the residential market, the idea is getting more attention from real estate investors. Proponents and founders say this fusion of the sharing economy and micro-housing offers a profitable solution to countless modern problems, both in real estate and society: increasing urban real estate values, and the pressure to maximize profit per square foot, a dire shortage of affordable options for young adults, and increased feelings of disconnection. And it’s not just for the inflated New York market; projects have opened or are under construction in both metropolises and smaller cities such as Syracuse and Chattanooga, Tennessee.

"I think of it like the tablet, in relationship to the phone and computer," says Ryan Fix, founder of Pure House, a group of coliving spaces in Brooklyn that offer a variety of membership options and shared workspaces. "It’s a new category that will become a staple for many people. It’s a seismic shift."

And perhaps more importantly, as far as the evolution of this model goes, investors and developers are placing bets on building coliving spaces at scale (even after Campus, a network of 34 such spaces, folded last June, unable to make it "economically viable" according to its founder). WeWork’s new WeLive space in Lower Manhattan, at 110 Wall Street, will eventually house 600 people on 20 floors, and they have additional projects in development in Washington, D.C, and Brooklyn. The company wouldn’t comment, beyond saying they are "in the early stages of beta testing a new, community-driven living concept in New York City … another layer of our platform focused on enabling people to live more fulfilling lives," but a leaked presentation from last August suggested WeLive is thinking big, planning to expand the concept to house 34,000 members within three years.

Christopher Bledsoe, who works for Stage 3 Properties, a New York-based real estate startup involved in developing a number of multi-unit coliving projects in major cities, sees the concept catching on quickly across the country.

"We look at it like a consumer product category," he says. "Designers look at a category and say, ‘Where’s the pain point in the market? How can I solve that pain point, market it and build a sustainable business.’ To us, that’s the right way to approach housing. But the exact opposite happens today in housing. It’s been hijacked by finance guys and the risk-averse, who view it as an asset."

According to Brad Hargreaves, founder of Common, a New York-based coliving startup with two locations in Crown Heights, Brooklyn, and a forthcoming, 20,000-square-foot space in nearby Williamsburg, the discrepancy between what’s needed and what’s built couldn’t be clearer. Before he started Common in 2015, Hargreaves co-founded General Assembly, an independent school geared toward teaching in-demand digital skills. One of the things the diverse student body had in common was the challenge of finding rooming and roommates. That constant challenge helped inspire him to start Common, a company that acts as a combination landlord/manager/community organizer, offering roughly 20 tenants a group living situations for $1,500-$1,800 apiece, which includes a bedroom (residents live in a suite-style layout), access to common areas and group events, as well as utilities and essentials.

"We’re acknowledging how people already live today, and want to make it something somebody does not out of economic necessity, but out of community reliability and a place to live," says Hargreaves. "We look at this as solving a particular need."

Hargreaves says that people have compared these buildings to communes, and admits that’s part of the inspiration. Community and connection, occasionally described in the over-the-top, almost utopian language of aspiring founders and tech entrepreneurs, is a huge selling point for coliving spaces, and the pitches can read like lifestyle marketing. Krash calls itself a "particle accelerator for people." But the ad-hoc roommate situation is already the norm. Common and companies like it are merely streamlining and simplifying the process, says Hargreaves, playing both matchmakers, by choosing tenants from a large pool of potential applicants, and guarantors (you’re not on the hook if a roommate bails and leaves you with their share of the monthly rent, since agreements can be month-to-month, and the space comes fully furnished).

Common – Pacific Flagship from Common on Vimeo.

"It seemed like a lot of voodoo and buzzwords that didn’t have a lot of meaning," says Cole Kennedy, a 24-year-old copywriter, of his initial take on Common. Last year, he was living in a New York apartment he’d found on Craigslist, and came across a Buzzfeed article about coliving. He applied to Common a whim, more out of curiosity than anything else, and in quick succession, received an offer for a new job and an email from Common inviting him to move into the startup’s space at 1162 Pacific Street. He took the offer.

Kennedy was looking in the neighborhood, and aimed for a studio or one bedroom under $1,200, a rare find in a neighborhood with the average studio was about $1,500 a month last year. His fully furnished room in Common (which includes a discount for signing a 12-month lease) now costs $1,545. He says there was a little sticker shock, but when you itemize it and look at what you get in terms of utilities, upkeep, and essentials such as linens and toilet paper, and consider the cost of furnishing an apartment, it makes sense.

"It’s still more expensive than finding a place on your own, but the mental space that is cleared out by them taking care of all that stuff is worth it," he says. "The only bills I pay outside of Common are for food, entertainment, and the subway."

Kennedy also came around to the idea of community. Others have said coliving spaces resembled a dorm, but he says it’s much nicer ("we’re all adults, have jobs, and are successful people"). He said he’d compare the experience to a fraternity, since in effect, you’re paying to be part of a group. But the community stuff he thought was snake oil or a hoax, was actually pretty great.

"I had lived in New York for 6 or 7 months before Common, and it’s hard making friends here," he says. "You go to work, hang out with people at happy hour, and then you go home, and if you’re lucky, you hang out with a roommate. Otherwise, you go drink alone at a bar or watch Netflix. You’re in the biggest city in the world, surrounded by people, and it’s lonely."

Of course, the predicament Kennedy, and others like him, face isn’t new. There have always been potential solutions to these issues, including the so-called informal system of finding a roommate. Getting a room at the YMCA, crashing in a single-room occupancy (SRO) hotel (often called flophouses, and the subject of a compelling 99 Percent Invisible podcast), even boarding at an old-fashioned women’s hotels, such as New York’s famed Barbizon, meant to keep single young women safe, have provided cheap, entry-level housing the new arrivals for generations. Social shifts towards more independent living, as well as legal challenges to SROs, have removed them from today’s housing stock, which still reflects a historical bias towards single-family living situations.

"Cities have always had different communal environments, whether it’s women or younger people, to begin their housing experience," says Kathy Braddock, managing director on the New York office of real estate firm William Raveis. "I think it’s all about price. What does it cost for me to live alone in New York, financially and psychologically? New York is busy, hectic, and certainly some feel like there’s a lack of community."

One misconception about coliving, according to Hargreaves, is that the buildings are serving a transient audience, which brings up comparisons to old-school SROs (Common had previously been investigated by the Department of Buildings as a potential SRO, new construction of which was outlawed in 1955, but wasn’t found in violation). He doesn’t have an exceptional amount of data to draw from, but what he has suggests that’s not the case. More than 70 percent of residents have made a long-term commitment, beyond a month-to-month arrangement.

"It’s convenient and has a friendly and warm community where they know their neighbors," he says. "It’s a great place to stay as opposed to a place to crash for a couple months."

Others, including investors, believe demand will only rise for this type of housing stock, even with shrinking unit size. Technological and economic changes have made the workforce more mobile and prone to work remotely, young adults are delaying marriage, and the sharing economy has made ownership less attractive. That’s opened the door for housing options that include furnished rooms, today’s digital necessities, and flexibility. Bledsoe, whose company is involved in a number of development deals, is pushing the Ollie concept. Short for all-inclusive, their buildings would provide furnished apartments with space-saving furniture, numerous amenities, including workout facilities and coworking spaces, social activities, and even access to Hello Alfred, the app-based butler service.

"You don’t shop for cars on square footage, it’s about performance," he says. "We’re providing time savings and social enrichment, in addition to the chunk rental savings, and this isn’t dorm-room IKEA furniture. This is high-end, space-saving design that allows a 300-square-foot studio to function like a 600 square foot studio. Even the 175-square-foot microstudios seem hundreds of square feet larger; the smaller they are, the faster they lease up."

Bledsoe and his partners believe that the key, from a finance perspective, is always density. Today’s urban consumer, he says, is comfortable with a high-density product that eliminates waste space and returns either lower rent or a better living experience. While they don’t have prices yet for their forthcoming developments, Stage 3 spends extensive amounts of time researching the "underground housing market," scouring Craigslist, ranking units on quality and price, and making sure that their units are competitive.

This move towards smaller individual units with more amenities, also reflected in the trend towards micro-housing, is what Fix is calling the "hotelification of housing." He sees the market developing like coworking has, with numerous options, from private apartments with high-end amenities, to "hippy-dippy, crunchy" communal living, and everything in between.

"Everybody think of WeWork as coworking, and it’s really not," says Fix. "It’s shared office 2.0. If you ask WeWork who their biggest competitor is, they’ll say Regus, the shared office company. We’re at a point where real estate developers will say if a new commercial building doesn’t have co-working space, it’s a less valuable asset. Coworking is now mainstream."

And, like coworking, coliving also offers the ability to be untethered, an attractive quality that’s already the focus for some startups. Roam, a startup founded by Bruno Haid, offers a $1,600 monthly membership that would provide access to a proposed string of locations around the world, giving today’s digital nomad the ability to work remotely across the globe. So far, the company has one location in a converted hotel in Bali, Indonesia, and plans to open spaces in Miami, London, and Buenos Aires later this year. Geared toward a higher-end, more mobile clientele, it’s not going to alleviate any kind of access and affordability crisis, but does show the diversity of ventures under the coliving umbrella.

"You can see communities forming where people are working location-independent," says Kim-Mai Cutler, head of communication for Roam. "If you came here to Bali, you’d see it everywhere."

Cutler believes there’s a place for a variety of models, but wouldn’t bet against the network effect of big cities. There’s a pull, as well as a push for connections and community, that will always draw people there. Is coliving a new means of making living in these increasingly expensive metropolises more affordable, a high-tech spin on an old concept, another disruptive company trying to bring a startup mentality to a new industry, or a combination of all three?

Sam Adams Nye, a former Pure House resident in Williamsburg who works for Coull, a video advertising firm, believes it boils down to simple connections. The 23-year-old Englishman recently lived in New York (he’s back in London now), and says people will always want to make the move to Manhattan. But, when they see what coliving offers, they’ll ask why they’re paying a premium to "live in a box like a battery hen," when they can choose a place that offers a little more community.

"You have all these people crying out for more connections," he says. "They’re meeting people through Tinder and other dating apps. People are desensitized to the connection with real human beings."