Just when agents think they’ve adjusted to every trend that could come along and impact the real estate industry, along comes another lifestyle shift that may have many real estate professionals studying its potential.
According to a CNBC report. the latest trend is “co-living,” an arrangement in which people who are essentially strangers move in to a home or apartment together, sight unseen. They lease a private bedroom and bath, but share common living areas. With rents on the rise, younger renters are ready to upset the apple cart, moving away from the typical methods of finding a roommate. This leaves mainstream apartment developers making a dash to cash in on the change.
Property Markets Group, an apartment developer operating in New York City, Miami and Chicago, designed and built one of the first rental apartment buildings specifically for co-living. A new building in Chicago’s Logan Square neighborhood has several units that feature three bedrooms, each with their own bathroom. The living quarters are fully furnished. This includes a television and even the silverware. A large hall closet can accommodate stuff for all three residents.
Co-living was hatched by millennials Ryan Shear and Noah Gottlieb, both principals at PMG. Shear notes that the idea was born from skyrocketing rents and shifting social ideas.
“When we left college, there was really no place that we could live. Social living, which is probably what summarizes what we’re doing, it didn’t exist. It still doesn’t exist on a mass scale. There was no community that was just targeted for the young professional.”
After coming up with the concept, the duo took off with the idea. This included developing the property and sowing the seeds of the social environment they hoped to see formed.
So they pitched the idea and ran with it — not just developing the building, but seeding the social environment that they hoped would exist there. Gottlieb points out that what they are doing is not really that new.
“People have been renting and living with strangers for a long time. The Craigslist model is established, and it’s something that people, especially younger generation of people are very used to dealing with. I think what we’re trying to do to be effective is to mitigate the negative aspects of that.”
Shear, who is based in Miami and developing the concept there, noted that developing the buildings can cost a little more than a typical development because of the added bathrooms and social spaces. However, the investment can be recouped in higher rents that come from the units. Even though the rents are lower for each individual, the total rent figure for each unit is higher, he noted.
“Co-living does, for the most part, solve the price point problem. It’s your cheapest entry into a building. Every one of our buildings will feel the same. They’re all different locations, they won’t all look the same, but they will all have the general bones of this philosophy.”
PMG is hoping to create 3,500 more co-living units over the next five years in both New York City and Miami. Gottlieb points out that the demand for space in the Chicago building has been strong. He’s even been surprised by the diversity of the applicants.
“The average age of our tenants renting by the bed is above that of our regular units. The average credit score of the people who are renting by the bed is above that of our regular units, so we’re finding that it’s a broad range demographic of people who are just living there for different reasons.”
