Why Co-Living Attracts Millennials
- Oct 05, 2016
New York—It’s been a year since the story of co-living company Common started in Brooklyn with the opening of its first shared house. Pacific, a 19-bedroom brownstone in Crown Heights, quickly found its first residents. There are now five homes in the Common community, located in New York, San Francisco and Washington, D.C. The success of the concept (modern, tech-friendly, shared apartments for young professionals) was unexpected, even for its founders.
Common raised $16 million in its Series B funding round this year from major investors including prominent real estate families such as Milstein, LeFrak and Mack. Multi-Housing News talked to Brad Hargreaves, founder & CEO of Common, and Sterling Jawitz, head of real estate strategic partnerships, about the way Common works and about the perks of living in the company’s newest houses.
MHN: Common is still a young company but has managed to grow quickly. How would you describe this past year?
Hargreaves: This past year has been incredible. The response to opening our first home in Brooklyn was so strong, we were able to rapidly expand. We now have five homes up, with over 100 members, and we’re running in major cities on two coasts and are actively looking at new homes and new cities.
MHN: What was the biggest challenge this project had to overcome?
Hargreaves: There are a lot of initial misconceptions about co-living. When many people first hear “co-living” they think of dorms or communes. But Common is nothing like that. We noticed that people of varying ages and incomes were living with roommates—often because they enjoyed the company—so we decided to build a friendly, comfortable, shared living product with services like cleaning, kitchen supplies and nice furniture. We took the way people were already living and made it better. When people see a Common home, the misunderstandings disappear. We are constantly walking potential real estate partners through our homes so they can understand our model, see the quality of our buildings and talk to our tenants. More and more people are calling to work with us.
MHN: What was the most surprising, unexpected thing that happened?
Hargreaves: We’ve received more than 10,000 applications over the past year for about 100 rooms. I founded Common because I knew there was a need for convenient, community-minded living. But I couldn’t have imagined how quickly that demand would accelerate. We have a steady 0 percent vacancy rate across all of our properties, all while spending nothing on marketing.
MHN: How does the Common business model work, exactly? Is there an initial lease from the owner and then each room is re-leased?
Sterling Jawitz: The first homes we opened were based upon Common executing a master lease for an entire building and then using our resources to help our members move into properties best suited to their needs and desires. Increasingly, we are moving away from that lease model and utilizing a management model where Common operates a building on behalf of an owner. We receive a standard management fee plus an incentive fee if we can achieve targeted results. Regardless of the model used, we provide our members with the same experience, essentially. We provide fully furnished homes with high-quality details. We also provide commercial-grade Wi-Fi. Members pay one monthly fee that includes all utilities, weekly cleaning as well as shared goods. We look to build strong communities in our homes and therefore provide ongoing events both on site and elsewhere, as well as encourage members to host their own events.
MHN: You’re opening new properties in Brooklyn and Washington, D.C. When can we expect these buildings to open and are you already accepting applications?
Jawitz: In the next month or so, we will begin accepting additional applications for Common, as we are opening new homes in Brooklyn and Washington, D.C. As always, our application process is through our website and can be completed in just a few minutes. As we get closer to opening these new homes, we will be reaching out to the many individuals who have expressed interest in joining our community. Details on these new homes will be available on Common.com soon.
MHN: Tell us about the new properties. Do they bring something new to the table (in terms of amenities, design, leasing process, etc.) or do they fit in the same pattern as the other Common buildings?
Jawitz: Each Common home is carefully designed to meet our brand standards. On the other hand, homes are different in size, layout and specific amenities. Our overriding goal is to create a home for our members that is safe, comfortable and fun. When you walk into a Common home, we want it to be easily recognizable as part of our community.
While each property will offer different amenities—ranging from a movie lounge to a wellness center to a game room or a hangout lounge—all members have access to the amenities in any Common home and participate in a wide range of events, including dinners, movie nights and book clubs.
MHN: What other cities are you targeting and why? How do you choose the places where Common will make its next stops?
Hargreaves: I don’t have any new cities to announce yet, but we are actively looking at other cities around the country, where we’ve heard the demand for Common’s model.
MHN: How do you see the future for Common and this type of co-living?
Jawitz: We are seeing a number of significant macroeconomic shifts, all of which give us great confidence that co-living is more than a passing fad. Individuals are marrying later in life, staying in cities longer and moving for jobs more frequently. While hard to quantify, increased value is being placed on sharing and experiences over ownership. The rising cost of housing has made it extremely difficult, if not impossible, for young professionals to live alone, even if they were inclined to do so.
Common is not creating a new living model. People have been living together with roommates for many years. We are turning a difficult and potentially unpleasant experience into a positive and enjoyable one. We see demand for this continuing to grow.
The future for Common is bright. Demand for membership grows month over month. We have been fortunate enough to receive significant financial backing from a wide range of investors, including some of the largest players in residential real estate. We plan to stay focused on providing an exceptional product and living experience to our members, beginning with the application process and continuing through an individual’s membership.
Images courtesy of Common