In the Williamsburg neighborhood of Brooklyn, a new, 20,000-square-foot residential development opened its doors to tenants this past spring. Called Havemeyer Home, the property features a lounge room, a cinema room, and a wellness room large enough for group yoga classes. The entire building appears to be out of a catalog, with trendy wares from West Elm and Restoration Hardware featured in every common room and all fully furnished units. Rent also includes various hot-button items, such as utilities, laundry, Wi-Fi, a weekly cleaning service, and fully equipped kitchens stocked with pots and pans (and even salt and pepper).
The cost to live there? Rents start at just $2,050 a month, in a neighborhood where the average rent exceeds $3,000.
Just to be clear, though, that rent only gets residents a bedroom—not a unit. At Havemeyer, there are 12 “suites” that encompass a total of 51 beds. Living rooms, kitchens, and most bathrooms are shared spaces, but more-expensive units offer a private bath.
On any given night, residents can be found hanging out watching a TV show, participating in a book club, and hosting potlucks in the common areas. They can also use designated channels on Slack, an instant-message–like communication software that participants can sign up for to organize discussions and send messages to neighbors about organizing an event or outing.
Havemeyer Home is just one example of properties tapping into the co-living trend growing across the multifamily industry in crowded markets like New York City and San Francisco, where residents sometimes have to squeeze by with four people in a studio apartment.
This shared-living concept is nothing new, of course. Boarding houses date back centuries and were largely popular with immigrants and single women in New York City during the early 20th century. Though the trend had mostly died off, the droves of millennials rushing into the city for a chance to pursue a dream has brought the concept of affordable living options to the forefront since the recession.
Real estate start-up Common, which manages Havemeyer, has opened nine such properties in its first 15 months in business. Brad Hargreaves launched the company in October 2015, coming off of his previous success co-founding General Assembly, a tech education start-up that originally began as a coworking space. General Assembly brought people in from all over the world to learn skills like coding, and Hargreaves quickly noticed the grind these people experienced trying to find roommates and an affordable place to live for a few months while they took classes.
Common has tapped into an immense demand, though—with just over 100 beds in its portfolio, the company has received more than 10,000 applications and hasn’t spent a dime on marketing efforts yet, according to Sterling Jawitz, the head of real estate strategic partnerships at Common.
“People have been living with roommates for a long time. It’s not really a new trend, it’s just kind of an unpleasant process the way it currently exists in the market,” says Jawtiz.
Community Operations
The main piece tying properties into the coliving trend is the concept of renting out bedrooms, instead of units, and maintaining shared living spaces. Their business models, however, vary.
Ollie, another real estate start-up, currently develops properties with micro units. Last year, Ollie opened New York City’s first micro-unit development, featuring 55 units varying between 260 and 360 square feet.
WeWork, the well-known coworking start-up, also entered into the coliving space, last April, with a business arm called WeLive. WeLive allows short-term and long-term stays, from a single-night rental to a traditional 12-month lease.
Common is taking the bet that renters who seek this type of living arrangement don’t want such a transient environment; rather, they want a true community.
“It actually detracts from the community when you have someone coming on for such short terms. You don’t really want to get to know your neighbor,” says Jawitz.
When it first launched, the start-up offered “memberships,” as Common refers to them, for as little as one week to 12 months. As the company has grown, its executives have recognized that the community has needed to reduce the transient nature of short-term rentals and build a long-term cohesive community as its competitive edge.
As part of its branding program for enhanced community experiences, Common uses the term “home” for its properties and divides them into smaller sections. For example, Havemeyer actually features four “homes,” which each rely on a “house leader” to oversee the daily needs of the group. The house leaders work similarly to resident assistants in college dorms: They have a separate, full-time job outside of the home, but, in return for reduced rent, the house leader will be the “eyes and ears on the ground,” as Jawitz describes it, to ensure that products are stocked; community events, like potlucks, are maintained; and any problems are resolved or elevated to management. While WeWork operates in a similar fashion, with neighborhoods and “house leaders,” the primary difference between the two models is the maintained community presence with the elimination of short-term stays.
The Business Model
The other primary difference between Common and other coliving/shared-space companies is that Common isn’t a developer, and it isn’t entering into master leases, like Ollie and WeWork, respectively. Rather, Common is a property manager.
To get off the ground, Common used master leases on its first properties to prove its coliving strategy worked. Then, the company started to partner with developers to build properties that would best fit the needs of a coliving experience, and Common could essentially activate the community aspect of it with a digital service and community managers.
The hard part comes with convincing developers to design buildings for this concept. The floor plans don’t match up to those of traditional properties. “Our housing stock is really not designed [for], and is not conducive to, that kind of lifestyle,” says Jawitz. “You have about a third of households here for individuals, but that’s not really the way that people are choosing to live.”
Developers have warmed up to the idea, though. More have opened their minds to opportunities to take advantage of a hot market and offer more solutions to the lack of housing in places like New York and San Francisco. But for a concept that’s still just proving itself, there’s a lot of up-front risk for a developer. Common makes it its job to help mitigate that risk with easy ways to convert units down the line if, ultimately, things don’t work out.
“When we design our projects and work with developers from the beginning, whether it’s a ground-up development or rehab or adaptive reuse, we try to be very cognizant and respectful of the fact that we’re asking them to build something that is maybe not as typical as you would see in the market with studio and one- or two-bedroom units,” says Jawitz.
What helps convince Common’s partners is the data on its residents’ demands. Since opening, Common has collected information on how people live and what they're willing to pay. This past September, it also acquired subleasing platform Skylight, which provides a trove of new data regarding how people search for a new home, including how early they start to search and what features they seek.
For Adam America Real Estate, a Brooklyn-based owner and developer that announced a deal with Common at the end of 2016, for a property in the Park Slope neighborhood, “the value proposition was clear,” says Omri Sachs, a principal at Adam America. Sachs had already seen how people congregated more in common and amenity spaces at the company’s other properties, so he sees coliving as a natural progression of that.
As planned, to minimize risk, the Park Slope property, Baltic in Boreum Hill, is a mix of coliving suites and studio and one-bedroom units. Essentially, the property could operate in a more traditional manner, but it’s Common’s ability to foster community that drew Sachs.
Creating a Culture
Coliving properties primarily exist in New York City and San Francisco, with another two being opened in Washington, D.C., this year, but a traditional multifamily company in Chicago is working to apply the concept to its own operations.
Property Markets Group recently launched L, a new, luxury property in Chicago’s hot Logan Square market. Using a typical unit mix for a new multifamily development, the team chose to offer its three-bedroom units as per-bed leases instead of per unit. The option, hopes Noah Gottlieb, principal at Property Markets Group’s Chicago division, will open the property to a new demand and attract the techie scene growing in Chicago.
While the approach makes sense for creating new business for hard-to-rent three-bedroom units, it doesn’t exactly replicate the true community aspect that first drew residents to coliving. Tenants may be able to make friends with their two other roommates, but the attraction of Common isn’t just the sharing of spaces; it’s the buildingwide community that hosts its own clubs and uses a Slack channel for community messaging.
Common even expanded its community amenities this past year to include a vacation spot, offering its members an opportunity to go to The Berkshires in Connecticut. The vacation home was supplied with all the features of Common’s properties, including Wi-Fi and fully stocked cabinets. With it being just a two-hour drive outside the city, members flocked to the getaway spot, opting to get some work done or go for a hike.
Common’s success proves that an entire generation that’s been attached to its screens is actively seeking convenient opportunities to connect off line. Maybe it’s a little like a dorm, a description at which the company shudders, but it’s a community nonetheless, and it’s one millennials want more than ever.
“We’ve been able to operate all of our properties, since launch, at 100% occupancy. Even if someone moves out, we’re able to backfill that room in 24 hours. That’s an incredible data point to think about when you’re trying to [grasp] what the size of this market is, what demand is there,” says Jawitz. “This is not a passing fad.”
