Why Co-Living Is Here to Stay
- Jul 05, 2019
Boston’s well-known academic institutions, high-tech research sector, health-care providers and financial companies are the pillars of the metro’s economic strength. All these are generating high-paying jobs at a rapid pace, maintaining upscale housing demand elevated.
Simultaneously, affordable housing is becoming an escalating concern. According to a recent Federal Reserve Bank of Boston report, some 25 cities and towns across Massachusetts—including Boston—are bound to lose all of their subsidized housing by 2025 because of the likely expiration of subsidies and the expected conversion of subsidized housing to market-rate units.
Developers and investors are trying different solutions to fill in this gap. While some came up with sleeping pods, others are betting on co-living. The growing trend has helped many companies scale their businesses across many high-cost, fast-growing metros. For example, Common has announced a major expansion that entails the firm opening co-living communities in Philadelphia, Atlanta, Pittsburgh and San Diego over the next three years, following a roughly $300 million investment.
Furthermore, Bungalow, a 2-year-old startup that operates in the Bay Area, New York City, Washington, D.C., among others, has recently launched co-living rental units in Boston. The company will have rooms available in eight neighborhoods, including Back Bay, Charlestown and Cambridge. By reallocating single-family homes for multi-unit rentals, the firm intends to bring affordable units to the market faster and with less capital. In an interview with Multi-Housing News, CEO & Co-Founder Andrew Collins discussed housing shortages and skyrocketing rents in Boston and revealed what determined his company’s expansion into the New England market.
How serious is the affordable housing crisis in Boston nowadays?
Collins: The primary problem for cities in general is that huge numbers of people are moving to cities that these urban markets can’t support. There’s simply not enough affordable housing stock and zoning laws often prohibit building infill density in urban centers. Boston, specifically, is one of the most expensive cities in the U.S. and it’s also one of the oldest, which means there’s very little available land left to build new, affordable housing. To their great credit, city leaders are working hard to build more housing and incentivize developers to help preserve economic diversity, but it will take time and it’s hard to say how “affordable” new housing units will be.
Why did you pick Boston and not another metro with low affordability to expand?
Collins: Boston is one of the most popular cities with Millennials and it’s one of the most expensive cities in the country. It was clear that there’s a need in Boston for more desirable rental units right now. That said, we’re expanding rapidly and seeing the same need in many cities across the country—it’s not confined to cities like Los Angeles, New York City, San Francisco and Boston.
What are the perks of living in such rentals?
Collins: Renters get much more than just a room: prescreened roommates, community events (they actually want to go to), services like cleaning and utilities taken care of and the ability to move without the financial risk. Housemates also tell us they’re forming relationships with diverse groups of people they wouldn’t otherwise meet and building incredibly strong support networks. It’s a New World take on communal living and, of course, it’s not for everyone.
Please describe the typical resident that would choose to live in your properties.
Collins: Bungalow residents are primarily early-career professionals in their 20s or 30s looking to rent in urban areas that have strong job opportunities. They’re moving to new cities for employment and want a living situation that provides both an inviting atmosphere and built-in community. With our two-sided platform model, Bungalow also partners with Boomer-aged homeowners who are often empty nesters looking to downsize and/or create an additional income stream.
How do you expect the co-living sector in Boston and across the U.S. to evolve going forward?
Collins: It’s clear that co-living isn’t just a fad—it’s a response to both what’s happening with rents in cities and a younger generation’s shifting values when it comes to renting and buying homes. I’ve always believed that smaller footprint, more communal living is the future of how we’ll live in cities, but the demand we’re seeing across the country exceeds even my expectations.
But there’s a caveat: The term “co-living” is so new and it’s increasingly being used for developments that are just luxury high-rises—rebranded and with less personal space. I don’t think that’s stopping anytime soon and we’ll continue to see developers investing hundreds of millions in massive adult “dorms” with micro units that aren’t actually affordable or a desirable way to live.