When Chris Bledsoe and his brother Andrew started developing a business model for co-living apartment communities, they didn't know how resistant the housing industry was to change. The two co-founders of what would eventually become Ollie started selling the concept in 2011 but didn’t leave their full-time jobs to do so.
The brothers figured they'd get push-back on co-living from developers because of related codes or costs. But what they ended up encountering surprised them.
“It’s just a risk-averse, conservative group,” Chris Bledsoe says. “Innovation inherently means change. And change was being seen as incremental risk.”
As the Bledsoes started calling on developers, the two entrepreneurs felt the challenges and friction points throughout the process. “It took a lot longer, because we had to get buy-in from architects, developers, lenders, and zoning and land-use departments," Bledsoe explains.
He wasn't exaggerating: It took 400 meetings with developers to meet just one who was ready to buy the idea of Ollie.
Matthew Baron and Jonathan Simon, of Simon Baron developers, were the first to invest in the start-up. “[Baron and Simon] weren’t too far removed from having, themselves, gone through a process of building a development company that was larger and more executional grade," Bledsoe recalls. "They had the benefit of having someone believe in them and have someone take a risk on them. They looked at my brother and me as the two individuals who could pull this off. We were three years in without a paycheck. They understood that’s what it would take to move an industry.”
Since they started working with Simon Baron, Ollie has signed up eight additional projects. “The more exciting thing to me is that we now get incoming requests to get Ollie to take a look at their projects,” Bledsoe says. “Unsolicited, we're getting requests from developers on how to configure their space, how to properly underwrite it, who the debt financiers are. We've positioned ourselves as the path to co-living and micro-housing.”
Common, another co-living provider, founded by entrepreneur Brad Hargreaves, opened its first development in Brooklyn in 2015. “Not only were we going to provide a better overall experience for the renter, from the property owner side we were going to remove all of the hassles of property management," says Hargreaves. "Last summer, we raised $16 million in funding, with many prominent real estate families involved, and this was a clear indication co-living isn’t a passing trend but is here to stay.”
All In
Ollie was launched as an all-inclusive co-living program, which is where the company's name comes from (a play on the term "all-inclusive"). Specifically, Ollie intends to offer a program for living while saving money, saving time, and having fun. Its apartments offer hotel-like services, smart-home technology, community activities, and other amenities.
“In effect, we wanted to be everyone’s favorite roommate or favorite neighbor, who cleans the house, or sets up the furniture,” Bledsoe explains. “All the things we do at Ollie are things we're lifting off the shoulders of the residents. Making social plans, etcetera. It’s a very friendly name. Have you ever met an Ollie you didn’t like?”
Ollie taps into renters' passion for convenience with fully furnished units and the Ollie Resident Portal, where residents can manage their rent payments, RSVP to buildingwide social events, permit guest access to their apartments, communicate with neighbors through their Slack channel, and more.
Ollie is based on a micro-unit design, Bledsoe says, that eliminates square footage so rent can be lower. He points to the four values that anchor the firm: inclusiveness, wellness, lifelong learning and discovery, and sustainability.
Both Ollie and Common emphasize community. “We're careful not to force community onto anyone, but the expectation is that the residents can be as much a part of the community as they want to be," Bledsoe explains. "It’s our responsibility to do as much as we can to facilitate that. Organize impromptu potluck dinner on the rooftop or a weekend ski trip. It’s hard for us to form community simply around what you do for a living, like start-ups that are about freelance or hacker houses, and that’s all good, but we aren’t going to fill up 426 units with just computer programmers, so it’s more important to build community around a value system or something more universal than just what you do for a living.”
The Tangible Appeal of Co-living
Besides the community experience and the "roommating" co-living offers, the benefits also include thrift. Both Ollie and Common provide all-inclusive living, which means no hidden fees.
Bledsoe says that when he and Andrew created the Ollie model, they were targeting an all-in 15 to 20% disccount versus a studio apartment.
Hargreaves points out co-living's benefits to the property owners, as well. He says Common is a full-stack company: In addition to managing the buildings, Common handles all the management reporting and building cleaning, providing shared supplies and maintenance—benefits to both the owner and the tenants.
Best Co-living Markets
Bledsoe is using big data from Craigslist and other sources to rank the markets that are most attractive for co-living developments. His data rank markets by roommating activity to find the ones most primed for Ollie’s model. Based on existing roommate activity, he lists the top 10 co-living markets as the following:
1. Boston
2. Philadelphia
3. San Francisco
4. New York
5. Los Angeles
6. Washington, D.C.
7. San Diego
8. Miami
9. Portland, Ore.
10. Baltimore
Hargreaves points out how data have enabled Common to go to scale, from one building in Brooklyn to 10 across the country. Common recently acquired Skylight, a marketplace for subleases, which provides data on important indicators for shared housing, including roommate preferences and price points. This information feeds the firm's expansion plans by exposing the unseen parts of the market.
“We're considering markets around the country and in places we feel could benefit from co-living,” Hargreaves states. “Recently, we announced our first property in New Orleans, with another Brooklyn location due to open this summer. These are in addition to the nine locations we have across the country in San Francisco; Washington, D.C.; and New York.”
Bledsoe studied 20 markets for a code-compliant path for co-living, and he contends that some markets make the apartment unnecessarily large, which counters the Ollie model and the tenant’s true needs. He says residents need and want functionality, not necessarily square footage.
Ollie at Baumhaus in Pittsburgh, a 127-unit, seven-story luxury apartment building comprising 31 fully furnished micro-studios, micro-suites, and a mix of one-, two-, and three-bedroom conventional units built by Pittsburgh-based developer Vitmore, was just recently announced. The community comes just before two properties open in Brooklyn this fall and an additional New York City property is delivered early next year.
Leveraging Technology
Ollie and Common speak not only to residents' need for affordability and community, but for technology, as well. Hargreaves notes that technology has allowed Common to provide a better experience for renters, where the bar for user experience has grown considerably.
“In many ways, Common is a technology company, but we’ve been able to go beyond what a normal technology company would offer,” Hargreaves says. “Members can do everything online, from completing the application process to paying rent and communicating with Common staff.”
Ollie is incubating a technology called Bedvetter to modernize the roommate leasing process. The technology could work for any units to give landlords and apartment owners a way to market their two-, three-, and four-bedroom units to nonfamily occupants, or to facilitate the formation of roommate households.
Bedvetter is its own brand that, tongue-in-cheek, means "vetting your roommate." Think of it as a marketing tool for the owner and, for the tenant, a free, platonic Tinder app to find a roommate based on compatibility.
The technology hasn't had to undergo the hurdles that Ollie properties did; many developers have already expressed interest in listing their units on Bedvetter immediately after the beta launches in a couple of months.
All Ollie units will be listed on Bedvetter, along with 4,000 apartments from two developer partners.
As co-living's momentum picks up, more developers are buying in to this new way of thinking—and leasing.
Hargreaves is scheduled to be the keynote speaker at the 2017 Multifamily Executive Conference, "Multifamily’s 2020 Vision: Planning for What’s Next." Register now to hear his ideas on the transformation of co-living.
