Coliving—that housing typology for stock-image-looking, experience-loving, stuff-hating, taupe-upholstered-furniture-sitting, high-earning urban millennial professionals—is getting some serious attention from investors. A month ago, reigning champ Common raised a rock solid $40M Series C (making a total of $63.4M to date), and then last week, NYC-based coliving operator Ollie snagged a $15M Series A.
These investments are good indicators that coliving may enter the real estate asset class canon after all. For the last few years, this event seemed less than assured.
Some claimed coliving was for losers. Others pointed to WeLive as evidence of the model’s inherent flaws. If you recall, WeLive is WeWork’s Icarian initial residential outing, consisting of two retrofitted ~30 story buildings; their overstyled, overpriced units now appear to be packed with company friends, family, and “ambassadors” paying discounted rents. Others assumed that big developers would eventually make their own coliving buildings, cutting out the expensive coliving operator.
Continue reading “Take my building, please: Do recent investments mean coliving is here to stay?”
Robbie Antonio is a Filipino self-portrait collector, Trump friend, and real estate mogul (or the scion of one…not clear). He’s also the dude behind Revolution Pre-crafted Properties, a company offering design-y prefab homes that can supposedly be shipped anywhere in the world. Their portfolio features designs from starchitectural offices such as Libeskind Design and that of Jean Nouvel.
RRP is now getting in the city-building business with a development called “Batulao Artscapes.” BA will be “The World’s First Livable Art Park” (we know how many people want to live in art parks).
BA sits on 346 acres 50 miles outside Manilla away from any coasts. It will, according to CNN, feature “12 different styles of [factory-built] home[s] set across four ‘villages.’….residents can choose from prefabs designed by notable creatives, from artist David Salle to the musician-turned-interior-designer Lenny Kravitz.”
So far as we know, this is the largest prefab development ever conceived. The project’s ambitions are only matched by the number of unanswered questions we have: ones like who, in a country with a per capita GDP of $3K, is going to buy funky modernist homes costing $50K-$1M (USD) set Florida-retirement-community-style in the middle of a jungle?
With a completion date said to be in 2020, our questions may soon be answered.
One thing that will surely affect our orientation to the city mouse/suburban mouse real estate and economic divide are new forms of mobility. It’s said that ride-hailing apps are already having a flattening effect on residential real estate values in NYC. Because getting around is so easy, one-percent New Yorkers are doing the unthinkable: cross-shopping properties in the East 70s with those in the West 80s!
But ride-hailing will be gentle kneading compared to the rolling pin of autonomous vehicles (AVs). Locations that were unthinkably far away when accessed in regular vehicles will become thinkable in AVs—it’s the difference road-raging during your 1.5 hour commute or binge-watching Narcos.
Quantifying this changing orientation to location is exactly what Phil Levin’s new consultancy 99mph is doing. He expects a $1 trillion movement of capital due to AVs flattening effect on real estate. And though full autonomous vehicles are a few years off, the long horizon of real estate investment makes this a timely concern.
Every six months or so, an article comes out saying that, despite ideas to the contrary, millennials love suburbs, not cities. What these articles seldom mention is the socioeconomic composition of these suburbaphiles. While populations boom in the burbs, educated elites still have a strong preference for cities, according to data recently released by City Observatory. They state, for example, that “the number of well-educated young adults living in the nation’s largest cities increased 19 percent between 2012 and 2016, about 50 percent faster than the increase outside these large cities.”
The proximity-enabled network effect of cities can be an economic multiplier, which is a strong draw for money-loving people and businesses alike. In contrast, many suburbs have fewer opportunities and may be over-reliant on a handful of large employers. And even though homes are typically more affordable, when lower wages and higher transit costs are factored, the suburban economic advantage is eroded. These conditions might help explain why suburban poverty rates in the early aughts were double those of cities.
While many people truly prefer suburbs, it’s also true that many others want to live closer to urban cores but simply cannot because there are no market-rate housing options that are affordable and attractive. Hell, lots of the educated elite can’t afford city-living. The universe belongs to whoever can provide those housing options in a timely and economical manner.
Alphabet/Google came out guns blazing last year with the announcement of Quayside, a planned city-within-a-city (Toronto) whose technological infrastructure will put Masdar City and Agrosanti to shame. According to The Atlantic’s Laura Bliss, Quayside will have a “self-contained thermal grid” with recirculating energy, carless sections, autonomous transit shuttles, convertible modular buildings, and much, much more.
Sounds dope. But there’s another aspect that’s less dopey: “a data-harvesting, wifi-beaming ‘digital layer’” covering the city. This layer is ostensibly designed to improve urban UX, but Bliss asks, “But to whom, and how, would this data be made available? And what would such an arrangement mean for any Quaysider who doesn’t wish to be monitored?” In other words, would you want Google or former Toronto mayor Rob Ford’s administration to know your every move? Would Ford have wanted anyone knowing any of his every move?
Lest we get too worked up about the whole deal, let’s remember building cities is hard—even within existing cities (just ask Tony Hsieh). Sidewalk Labs—Alphabet’s urban lab helmed by city-hating CEO Dan Doctoroff—has pledged $50 million to Quayside. That should cover a four-story mixed use building, and maybe a bus stop. The rest of the funds will likely come from private developers, who will no doubt make the Sidewalk project more pedestrian.
Any way you look at it, using cities-as-data-mines will be a big deal in the coming years for cities new and old alike. Expect many questions in this realm as well as a growing focus on how data harvesting affects real estate valuation.
Last week was NAHB International Builders Show (IBS) in Orlando, Florida. Per tradition, the show builds The New American Home (TNAH), an offsite showcase for the latest and greatest in single-family home design and construction.
This year’s entry put the “NAH” in TNAH (it’s also like real estate’s case of IBS…so many puns to choose from). The 6,533 square foot “Tuscan” five bedroom behemoth featured two double garages and a master bathroom suitable for bathing at rhinoceros. Read Treehugger’s Lloyd concise takedown of this monstrosity.
The house is a sad commentary on the mindset of American builders.
Single-family housing is still the main type of American housing, making up 76% of the housing stock. And there’s a huge deficit of low-and-mid-market new housing. Harvard reported last year that “Between 2004 and 2015, completions of smaller single-family homes (under 1,800 square feet) fell from nearly 500,000 units to only 136,000. Similarly, the number of townhouses started in 2016 (98,000) was less than half the number started in 2005.”
This deficit at the middle and bottom exacerbate an already-bleak housing situation. And while there are intermittent signals that builders are interested new, modest models of single-family housing, the TNAH shows that, despite its bad press, the McMansion is alive and well.
Some of us are fervent—and perhaps unreasonably romantic—lover of cities. For those so afflicted, the lack of affordable housing options in America’s most vital cities—and the cultural/economic heterogeneity those options support—makes us sad.
The dearth of affordable housing can be blamed on a bramble of regulatory, lending, manufacturing, and market conditions. This, in turn, leads many urban developers to default to building generic high-end rentals and condos that are inaccessible to non-investment bankers.
While there are hints that the luxury rental market is seriously softening, the status quo leaves many high and dry. But there are a few startups that are creatively hacking market conditions to offer somewhat affordable options to the underhoused masses.