Is coliving ready for prime time? This big developer thinks so

When people speak of coliving, they tend to think of Common, Ollie, Roam, Starcity, and the Collective UK. These companies are all relatively new. Most are asset light. And though many have raised respectable sums of money, the volume of units they operate or own is a rounding error compared to the number of units development and/or managed by folks like Greystar, AvalonBay, and Related. With the exception of Vornado’s partnership with WeLive, behemoth multifamily developers have stayed out of the coliving/shared-living scene in any official capacity.  

That could possibly change.

Last year, Property Markets Group (PMG), a developer with $6B in completed projects and operating 80 buildings across the country, announced a sub-brand dubbed X Social Communities. PMG chose ‘social community’—as opposed to coliving—because they’re not keen on being called an adult dorm, according to their Dir. Brand Experience Brian Koles. Nevertheless, X bears a striking similarity to coliving: smaller units, big amenities, furnished rooms and apartments, roommate matching, and a ‘Rent By Bedroom‘ program, where each roommate has his or her own lease. 

PMGx differs some from the standard bearers of the burgeoning coliving market. One, they’re acting as developer/owner/operator (only Starcity and The Collective UK are doing that). X is also staying away from NYC, SF, LA, and Boston where most operators and owners are setting up. Instead, they are building in less constrained (and less expensive) cities like Miami, Chicago, and Denver.

By virtue of the markets X serves, unit and bed prices are lower than in top-tier cities. Leasing just began on X Miami, where rents range from $1,300-$2,800 with a unit mix of studios to shared three beds (Koles said the $1300 beds in shared units were leased out immediately. This lends credence to the notion that price, location, and amenities trump the need to have your own apartment). Their X Chicago, which opens July 15, has rents ranging from $1,100-$2,600 with a studio, one, two, three, and four bedroom mix. These rents aren’t necessarily cheap for their markets, but it’s important to note these are furnished apartments and beds (almost all en-suite) in Class A, luxury buildings with great amenities.

And then there’s the scale. Their beta building, X Logan Square in Chicago, had 120 units. X Miami has 464 units. X Chicago has 99 units. The PMG site shows more buildings planned in Chicago, Denver, and Fort Lauderdale. Koles says they’re looking to bring 10K+ units coming online in next 5-7 years. These numbers are substantially higher than the most every coliving project to date, with the exception of Ollie’s 422 bed Alta project

It will be a critical few years in terms of whether coliving is here to stay. The success of big projects like X and Alta by Ollie could be the validation other larger developers need to take shared apartments seriously. Conversely, their lack of success could be the segment’s death knell. And it’ll be interesting to see other companies move into different markets and segments. Common, for example, has an upcoming project in Newark and an affordable housing project in New Orleans. Several companies are moving into suburban coliving

With an ever-worsening affordability crisis, a growing trend toward shared living, and significant cooling in your standard, luxury rental, coliving has the potential to serve great numbers of heretofore underserved renters and enter the canon of standard multifamily operating models.   

Life preservers are the hot new housing amenity

As many as 311k homes face being flooded every two weeks within the next 30 years—this is the finding of research recently released by the Union of Concerned Scientists (UCS). The research was based on projections made by the National Oceanic and Atmospheric Administration (NOAA), which include 6’+ sea-level gains by century’s end if our current GHG emission rates continue.

These 311k homes—whose current value stands at $120b—are just the beginning, according to The Guardian:  

The losses would multiply by the end of the century, with the research warning that as many as 2.4m homes, worth around a trillion dollars, could be put at risk. Low-lying states would be particularly prone, with a million homes in Florida, 250,000 homes in New Jersey and 143,000 homes in New York at risk of chronic flooding by 2100.

On top of this, areas could be dealing with myriad issues like closed roads, infrastructure damage, and other stuff that would grind our economy to a standstill.

Needless to say, the nation’s largest economic powerhouses—most of which are coastal—are vulnerable. In the next 30 years, many should be okay…except Miami, which is projected to have 25,001 to 150,000 homes experience chronic inundation by 2045. Continue reading “Life preservers are the hot new housing amenity”

Affordable AF: video recap of Pizza + PropTech (5/30/18)

Last week, Dror Poleg and I hosted our first ever Pizza and PropTech event in NYC. We had a great turnout and will be doing another in July. Be sure to sign up to my newsletter for updates.

While you’re counting down the days until July rolls around, check out our talks.

Where did I put that gosh darn shaker of salt?

Everyone is like millennials this, millennials that. Yes, there’s a lot of them. But they’re broke and, despite their Tinder-swiping ways, they ain’t reproducing.

If you want to get excited, look to Boomers. They’re plentiful too, well-heeled (at least relative to millennials), and many of them are looking for compact, age-appropriate crash pads before heading off to heaven.

Some folks foresee a mass senior downsizing, calling it the silver tsunami. And one person who’s got his surfboard ready is Jimmy Buffett.

Buffett has already built an empire leveraging his white-bread, inebriate beach-bum brand for everything from Broadway musicals, themed restaurants, and 11 Margaritaville hotels. Now Margaritaville Holdings is partnering with senior-specialists Minto Communities to offer up two 55+ communities dubbed LATITUDE MARGARITAVILLE (all caps for easier reading). Continue reading “Where did I put that gosh darn shaker of salt?”

Oh what a feeling when you’re sleeping on the ceiling

Back in 2011, MIT Media Lab’s Changing Places Group started their CityHome project, which explored how data and technology could make living spaces more flexible, efficient, and reflective of use patterns. Eventually, the group built a prototype micro-apartment with sensor-enabled, gesture and app controllable furniture; the centerpiece of which was a module containing a bed, table, kitchen, storage and other stuff.

The CityHome was part of a larger movement. Mostly focused on micro-apartments (sub 350 sf), this movement saw how furniture could play a critical role in spatial design. Other players included LifeEdited (where I worked for several years) and Yo! Home—the residential arm of Yo! Companies/Yotel/Yo! Companies.

Anyway, fast forward a few years and some of the MIT students decided to bring the tech to the free market. Thus Ori Systems was born. Continue reading “Oh what a feeling when you’re sleeping on the ceiling”

Affordability is the freaking amenity

If you have an hour to fill and are interested in the intersection of design and affordable housing, you could do a lot worse things than watch this talk at Harvard’s School of Design’s Reframing Housing from a few weeks ago (below). The panelists represent some of my favorite designy, affordable projects of the last decade or so. Each represents a way to develop in a different urban (or non-urban) condition and all the considerations that condition entails. All are worth knowing about if you don’t already.

From Philly, there was architect Brian Phillips. His shop, ISA, has done of a ton of cool infill projects that incorporate a variety of cost-saving, energy-saving, design-savvy stratagems for affordability. ISA is the design force behind Postgreen homes, makers of the 100k house, a LEED platinum townhouse in Philly’s East Kensington neighborhood that was built for $100/sf. Postgreen—powered by ISA—has done a bunch of similar project with names like Awesometown and Avant Garage. Continue reading “Affordability is the freaking amenity”

When will we stop building in dumb places?

Conversations about the future of real estate tend to cover topics like autonomous vehicles’ impact on place-making, coliving, modular and tech-enabled construction, and robotics. These fun topics allow us to put on our Muskian caps and wax about the possibility of how wonderful things could be in the future.

What’s less often discussed is the bad, highly-probably stuff. And the baddest and most probable stuff is global warming, which will likely make many major markets virtually development-proof in the not-so-distant future.

As of 2010, 39% of America’s population lived directly in coastal areas that include virtually every major city (the number was projected to jump to 47% by 2020); most of these areas will be subject to the impact of sea level rises and their attendant storms. A recent report underscored this, suggesting that 41M Americans live in areas, both coastal and inland, that are susceptible to 100-year flood (read: big-ass flood). This is a major revision from FEMA’s previous 13M estimate.  

Continue reading “When will we stop building in dumb places?”

The machine that will drive the NIMBYs out of their homes

NIMBYs objections tend to run something like, they want to: protect the character of their neighborhoods, prevent gentrification and maintain affordable housing for existing populations, prevent overcrowding, and so on. But underneath the protests is a more base—if unconscious—financial concern. Often, a large share of the NIMBYs wealth is tied up in their home’s value. Suggestions of easing housing scarcity—the big driver of their personal wealth—can strike them as an existential threat.

But most people have a price. What if the NIMBY could see—and benefit from—the real development potential of their property? That’s the idea behind CityBldr. The Seattle-based startup is using “machine learning on dozens of disparate data sources” to find the “highest and best use” of a property (read: milking the most money from it). They claim their system can help fetch as much as 89% more than conventional valuations. They will help you shop your property to builders and developers and they also have tools that will keep you apprised of potential upzoning—an issue that could be a big deal in California in the next year. Continue reading “The machine that will drive the NIMBYs out of their homes”

NYC gets mod complex

Interest in modular construction is exploding. Modular factors into Katerra’s product offerings. Google is working modular into their Quayside master plan and has commissioned 300 modular units from upstart Factory OS, bound for employee housing in Silicon Valley. And a handful of interesting companies are moving into the space. Now the city of NY wants to go modular. The city’s Modular NYC RFI and RFEIs are looking specifically at modular solutions to help meet De Blasio’s Housing New York 2.0’s ambitions for creating and/or preserving 300k affordable housing units by 2026.

The “I” in the RFI is a brain-dump from “market participants,” explicating how modular will work in a variety of multifamily settings throughout the boroughs. The RFEI “invites expressions of interest for modular affordable housing construction on private sites within the five boroughs,” with the aim of expediting “the pre-development process” for successful RFEI  respondents. These preliminary steps will be shortly followed by an RFP for a project built on city lands. Continue reading “NYC gets mod complex”

Sky’s the limit with biggie smalls apartment

The micro-apartment topic tends to be framed around micro-studios. But the hefty development costs of building an NYC micro studio result in a rent which is 115% of the AMI (area median income). 

The problem is studios require the same plumbing and electric work as larger units (which is why shared kitchen/bath SROs make so much sense). So developers default to building two and three bedroom units, where plumbing and electric costs can be distributed across more beds. Larger units are also seen as a more reliable unit type by lenders, probably because they can be adapted to roommates, couples, and families. 

Cheaper development costs and cheaper debt mean two and three beds can be offered at cheaper price points…to an extent.

Square feet still cost money. A luxury square foot rents for around $6/month in Manhattan, which means a 900 sf two bedroom will set you back $5400. This is a good chunk of change for most.

The world belongs to the developer who can figure out how to bring new units to market without giving away $5k gift baskets.  

Ranger Properties might onto to something with “The Lanes.” Their Long Island City building features 57 micro two and three bedroom apartments—490 and 735 sf, respectively (compared to 900 and 1,200 sf for more conventional units). By shrinking unit sizes, Ranger presumably achieves the economy of scale that keeps development costs low on larger units. But because units are small, they can charge a solid $/sf without elevating rents too much, especially when compared to market comps.  Continue reading “Sky’s the limit with biggie smalls apartment”