Co-Living Development: What to Know About This Emerging Sector
- Feb 26, 2020
With rents on the rise and people’s need for interaction increasing, the co-living sector is getting more and more attention from both developers and investors. This type of housing is targeting young adults delaying milestones like marriage and homeownership, and the ones who feel lonely and prefer to share their private space with others. “Co-living is clearly not for everyone, but it does fill a useful niche,” said National Development Managing Partner Ted Tye about the segment.
In an interview with Multi-Housing News, he talks about the company’s co-living development—7INK, located at 217 Albany St. in Boston, the seventh and final building of Ink Block. Despite a consistent pipeline in the past several years, demand for rental housing has kept up the pace in Boston. Tye explains how co-living provides an alternative for renters in a tight market like Boston.
READ ALSO: Why Investors are Moving Into Co-Living
According to Yardi Matrix, National Development owns roughly 3,220 units in Boston. What attracted you to the area, and what does Boston have to offer compared to other markets?
Tye: Boston has been National Development’s home for over 30 years. We have always liked Boston’s foundation of educational and medical institutions that has provided the city with a strong employment base. Boston is a compact, walkable city with historic character and a strong sense of neighborhood. Today, the region’s economy is robust, based primarily on a combination of new and developing businesses focused on technology and science.
Tell us about your most recent project, 7INK. What makes it stand out in today’s competitive market?
Tye: 7INK is the seventh and final building at our award-winning Ink Block development, built on a full city block in the South End that was previously the home of the Boston Herald newspaper. Ink Block has become one of Boston’s hottest neighborhoods and includes apartments, condos, a hotel, dining and shopping, and a Whole Foods Market. 7INK will be a 14-story, 180-unit co-living building—the first major co-living project in Boston.
We researched co-living around the country and think that it is a great addition to our residential mix at Ink Block. We have leaned on Ollie, a New York-based innovator in co-living, for assistance in developing the concept and programming for 7INK.
You first announced 7INK in 2017. Tell us about the path for this project. Has the project changed since then?
Tye: Development projects in Boston often take a year or more to go through the public approval process. With co-living being a new concept, we worked with the city to both understand co-living and make it fit into current policy. The city of Boston has been very supportive of bringing new ideas to the city. The only change that we made from the initial introduction was to rebalance our unit mix to provide additional multi-bedroom apartments, which helps us provide more units at a lower price point.
How will the project impact Boston’s multifamily market once completed?
Tye: 7INK will not be a major disruptor in the multifamily market. What it will do is provide another alternative for renters in a tight market that has experienced increased rents. Boston’s mayor has set a goal of adding 69,000 new housing units to the city’s supply. Additional housing supply of all types, including co-living, dormitories for Boston’s many college students, apartments, etc., will help meet demand and stabilize prices.
What is the most challenging aspect of developing co-living projects?
Tye: Being the first mover in this area, developing co-living requires providing education to neighbors, regulatory authorities, lenders and potential tenants. From a cost perspective, these projects require a dense building plan with a high percentage of kitchen/bathroom and amenity space compared to overall area, so managing costs is a challenge.
How do you expect the co-living sector to evolve going forward?
Tye: I expect to see more variation of concepts within co-living. This will include projects of various sizes providing different levels of service to a wider range of demographics. With more experience in this sector, the market will speak in terms of what residents are seeking. We are excited to be a first mover in this emerging sector.