Why Co-Living fared better during pandemic


Looking back at 2020, the street retail and hospitality industry are being decimated by the pandemic, office continues to face challenges unseen in decades, multifamily certainly feels the pain to some degree. Co-living concept though seems to weather the crisis surprisingly well. One of such concepts, Common, was able to raise $50M in series D funding this fall. Sources claim that a resilient occupancy level in the face of a global pandemic was one of the key reasons for the successful fundraising. So how did co-living pull it off?

Some background information on co-living.  In a nutshell, co-living resident rents a bedroom in an apartment instead of the entire unit and shares the living space, kitchen and bathroom(s) with other renters. It differs from the traditional rental model in a few ways which can be grouped in three categories:

Economics


  • A slightly reduced rent compared to traditional studio in the same neighborhood

  • A flexible lease term (3+ months)

  • A roommate arrangement without each renter responsible for missed rent payment or early lease termination of other roommates

  • All utilities included

Tech-enabled Social Experience

  • Dedicated app to connect members

  • Tons of community spaces 

  • Sponsored social activities

  • Seamless leasing/renting through Common website

  • Keyless access

  • Free wifi

Hassle-free Amenities

  • Fully furnished apartment

  • Basic supplies for kitchen and bathroom

  • Weekly cleaning service

  • On-site laundry for free

So what actually helped co-living to maintain relatively high occupancy during the crisis? I guess it’s the Tech Enabled Social Experience.  The still ongoing pandemic caused social distancing and unprecedented isolation.  Most people have been away from their families and friends for a long time.  Common through its dedicated app helps connect members of their community. It’s a strong sense of community in time when people need to be connected the most. It’s that “I got your back” feeling which helps one another feel safe and comforting.  Residents can chat through the app.  They can help each other with grocery shopping or running errands.  They can get together in their community spaces like backyard or roof deck where gathering can be safe without going out to places like bars or coffee shops. All of these differentiate co-living from traditional rental model in a way that precisely demonstrates the accelerated trend of tech enabled social experience for multifamily assets in the future. 

Comments

Post a Comment

Popular posts from this blog

Case study - boutique condo development sold out during pandemic

Image
New York City was hit hard by the pandemic.  Hotels are going through foreclosure, office experiences record vacancy, street retails (sometimes block long) are still empty, rental apartment rents dropped 20-30%, and people across all ages are leaving the city.  Everything that you see on TV or on the street is quite bleak.  You wonder if the real estate industry is doomed in NYC.  As a real estate developer, I was born optimistic and here is a bright spot and great example of New York Strong, an 11-story 15-unit boutique condo development in Chelsea that was sold out in less than 12-month during the depth of the pandemic.   Total number of units 15* Sale launched February 2020 Last unit sold January 2021 Average unit size 2,570 SF Average sale PSF $2,320 Average sale price per unit $6M Total sellout (11 units only) $65M Acquisition $4M Estimated construction (soft/hard/financing) $33M Total development cost $37M Profit* $28M Equity multiple (assuming 50% le...
Read more

Real estate value-add strategy - Part 1

Image
  I remember when I first started in real estate, people talk about value-add deals all the time. It all sounds really cool but I was clueless. Well, not exactly, I know you can buy fixer-upper, renovate it and flip for profit. But I wasn’t sure how it works in the apartment business. I spent a couple of months going through value-add deals on TheRealDeal (going back two to three years). The analysis got easier once I passed the 50th deal and when I hit the 100th deal, I think I figured it out! By the way, that’s another topic I can hardly find any good articles on the web. Maybe it’s too simple, no one bothers to write it up. Here is what I came up with and hope it can help someone having the same question like I did. In a nutshell, you find a building with units that can be renovated to achieve higher rents and/or enlarged using available air rights to generate additional income. Once renovation or enlargement completes and units are leased up, you will refinance the b...
Read more

What self-driving cars mean to real estate industry

Image
Self-driving vehicles are coming sooner than you think.  Imagine you can just hop on the car, enter an address on your phone and the car will take care of the rest.  Well, that might become true very soon.  Tesla has offered electric vehicles with semi-autonomous Autopilot feature for a few years now.   Waymo opened its ridesharing program Waymo One using autonomous cars to the general public in Phoenix last October.  Driverless cars from Nuro are already on the road as delivery vehicles in the Bay area starting last December.  As it gradually turns into an inevitable reality to our life, I cannot stop thinking what all these mean to the real estate industry.    My thoughts took me back to the first class of Commercial Real Estate taught by Professor David Geltner at MIT.  The classic real estate theory about urban areas is mainly based on the Monocentric City model.  The model explains that any real estate value is the sum of three c...
Read more