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Sunday, April 14, 2024

1 House, 40 Roommates? During Covid, Co-Living Adds Up

Every Sunday, Prophet Walker would shuffle downstairs to eat dinner with his 40 housemates, in a shared kitchen they call “the dining hall.” It’s one of many common areas in Treehouse, a Los Angeles co-living community that Walker dreamed up in 2016. He created the Sunday dinner tradition to make the space feel less like a luxury apartment and more like a grown-up dorm. “Then Covid hit,” says Walker, and a dorm was the last place anyone wanted to be. “Everyone was like, well, what do we do?”

Treehouse had just started leasing in December, and the pandemic threatened to scare new renters away from its millennial commune, where 60 private bedrooms adjoin communal space for eating, working, and hanging out. The Sunday dinners were put on hold. One resident moved out, questioning the sanity of living with so many people in a time of social distancing. Yet Treehouse has seen applications shoot up since Los Angeles went on lockdown. “What we have found is that people moved during quarantine, and they were actively looking for a place where they’re not going to be alone and isolated,” says Walker. The majority of Treehouse’s residents signed their year-long leases during the pandemic.

Even before the pandemic, co-living spaces were in high demand. “Today, there are 2,900 standing co-living beds across the United States,” says Susan Tjarksen, the co-living expert at real estate services firm Cushman & Wakefield. “That's supposed to triple in the next 18 months.” These arrangements offer an answer to climbing rent prices in big cities: By exchanging private living rooms and kitchens for communal spaces, residents get a deal, plus additional perks like furnished units, housekeeping services, and all-inclusive utilities. (Those perks differentiate from the less disruptive model of “having roommates.”) The buildings are often tastefully furnished and offer unique amenities, like on-site cocktail lounges or coworking spaces. Some, like Ollie, offer hotel-like rooms; others, like Brooklyn-based Node and Oakland-based Open Door, convert century-old mansions into one-of-a-kind co-living spaces. All of them make the case that—even in a pandemic—living together is better than apart.

Common logic suggests that, in 2020, hell is other people. But while the Covid-19 crisis has inspired its fair share of roommate horror stories, co-living buildings continue to see demand. Cushman & Wakefield has been tracking the new leases, renewals, rent collections, and occupancy for co-living buildings since the pandemic began. By its count, co-living has either matched or outperformed traditional real estate on all fronts. The reason is financial—the economy has slumped, which has driven people to seek cheaper alternatives—but also social. The pandemic has robbed people of the amenities that a city usually provides: bars, restaurants, space to mingle. Co-living startups offer much of that back, like a city shrunk into a single building.

On a recent virtual tour, Walker and his cofounder, Joe Green, showed me around Treehouse’s building in Hollywood. They designed Treehouse from the ground up, strategically arranging the private bedrooms around a wealth of shared space. There’s a resident café, which features a green velvet couch and a canopy of hanging plants. “We have every way you could imagine making coffee—Japanese pour-over, French press, everything is here,” Green told me. There’s a lofted library, where books are arranged by color, and a basement lounge with a well-stocked cocktail bar. Residents gather for movie nights, yoga sessions, and other events; the basement laundry room doubles as an art studio. People like to hang out on the roof, which has, for some reason, two working clawfoot bathtubs. Treehouse charges a base rent that starts at $1,717 per month, plus a monthly $210 “community fee” for all the extras.

The vision was inspired, in part, by Green’s college days. As a Harvard undergraduate, he lived in Kirkland House, a sort of elevated dorm that over 350 undergraduates call home during the school year. Green has fond memories of sharing meals in the dining hall and hanging out with Mark Zuckerberg, who lived in the connecting suite. (Zuckerberg remembers it differently: He once called Green “the quintessential worst roommate” for regularly eating his Hot Pockets without permission.) But very little about Treehouse conjures images of dorm life. It looks more like a premium Airbnb, with interior design made to be shared on Instagram.

Co-living is largely a millennial trend, but the oldest of those millennials are, like Green, just shy of 40. “There’s a big misunderstanding that co-living is an extension of the student housing or dorm experience,” says Brad Hargreaves, the founder and CEO of the co-living startup Common. “People in real estate who think about this say, it’s great for a 22-year-old, but our median age is around 30.” Cushman & Wakefield’s data has found that the average age of co-living residents is between 24 and 32, and as high as 37 in cities like San Francisco.

Rather than emphasizing communal kitchens and bars, Common’s bread-and-butter are its co-living units: beautifully furnished, self-contained three- and four-bedrooms with all-inclusive utilities, Wi-Fi, and cleaning services. It manages entire apartment buildings, and half of its units are single-family occupants. The mixed approach has allowed Common to scale. The startup currently manages 3,500 units with another 17,000 signed and under construction; it has expanded into 26 cities. Most of that growth has come over the last 18 months, with an extra boost this year. “We’ve really hit an inflection point,” says Hargreaves.

Co-living spaces aren’t always the cheapest option available. “You can always find a three-bedroom walkup with no elevator, no air-conditioning, and no dishwasher for less,” says Cushman & Wakefield’s Tjarksen. But in terms of new construction, Tjarksen says, co-living often remains the most affordable choice in urban areas. A Cushman & Wakefield report from last May found that co-living buildings further subsidized rent with amenities like housekeeping services or inclusive utilities, “which in the aggregate represent as much as a 20 percent discount to living alone.”

While discounted rent is part of the pitch, most co-living startups are trying to do more than just offer a deal. Open Door, founded in 2013, currently operates 12 co-living houses on the West Coast, each with its own unique traditions. “We’re not just trying to put butts in bed,” says Jay Standish, Open Door’s cofounder. “Living in community can be one of the most profoundly impactful growth opportunities for many of our residents. That’s our product.”

Standish lives in one of Open Door’s houses, a 6,000-square-foot Oakland mansion called the Euclid Manor. Its dozen residents eat dinner together in a wood-paneled dining room; they share bicycles and camping gear. When roommate squabbles arise—a problem with the cleaning schedule, or the communal groceries—Open Door can step in. “We’re available for community support, to help with interpersonal snags, and just generally keeping tabs on things to help things go smoothly on all levels,” says Standish.

Because each of Open Door’s houses are unique, the residents self-govern. When Oakland residents were asked to shelter in place this spring, the Euclid Manor housemates made their own policies around guests, travel, and hygiene. Some of Open Door’s residents moved out in recent months, citing lost jobs or health concerns, but new residents have also moved in. “When it goes really well, it’s because there’s something more than just housing,” says Standish.

Eventually, some residents simply outgrow co-living. Rej Jenkins moved into Treehouse in December, making him one of its earliest residents. He likes the range of people he’s met there, and the convenience of making a latte in the resident café rather than having to walk down the street to get one. But when the Covid crisis hit and his girlfriend’s roommate moved out, he started spending a lot more time at her place, where he has more space to himself. “I like being able to come home and know that I put something in the kitchen, it’s still in the kitchen,” he says. He still stops by for Sunday dinners on occasion, but he hasn’t spent much time at Treehouse lately. “I’m 31,” says Jenkins. “I don’t want roommates.”

Treehouse already has plans to build a second and third property in Los Angeles, modeled similarly to its building in Hollywood. The opportunity, as the startup sees it, isn’t just for residents. “We’re utilizing real estate in a different way,” says Walker. The empty lot where it built its Hollywood residence might have yielded 33 bedrooms in a traditional apartment design; Treehouse stretched it into 60 bedrooms by foregoing kitchens and living rooms in individual units. Per square foot, a startup designing co-living spaces can make a lot more money than one that’s building traditional apartments—an appealing idea for Treehouse’s investors, who include Alexis Ohanian and Scooter Braun.

At Treehouse, life returned to normal fairly soon after the pandemic began. The Sunday dinners in the dining hall were briefly replaced by a building-wide Zoom call, but the residents decided to bring back the in-person event after a few weeks. They also agreed to keep common spaces open, even while, early on, people stayed out of spaces like the gym and the music studio. Guests were temporarily disallowed and now are required to wear a mask at all times when visiting the building. Walker says there have been zero cases of Covid-19 at Treehouse, in part because the residents know and respect each other.

“They're a community,” he says, “not just a bunch of people living in the same building who don't really know each other.”

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