New York native Danielle Healy is one of seven strangers picked to live in a house in Brooklyn.
When the 26-year-old was fed up with her roommate and paying expensive rent, she decided to look into a co-living space in Williamsburg, a house with communal living where she wouldn’t be locked into a lease.
“I was paying $3,500 a month for a crappy room in a two-bedroom apartment with a roommate that I hated, and when I was there I never left my room,” Healy told FOX Business of her former apartment in the Gramercy neighborhood of Manhattan.
Healy, a business consultant for tech companies, is always traveling for work, so signing a lease felt like a waste of money. She’s one of many renters seeking out a co-living housing arrangement where people can pay to live in a private or shared bedroom like they would in a college dorm. These homes or apartment buildings come fully-furnished with communal living rooms, kitchens and bathrooms. Utilities are included along with Wi-Fi and a house cleaning service, and in some luxury buildings, there are even amenities like rooftop pools, spas, and saunas. Perspective residents sign short term leases or apply for “memberships,” and they can stay for however long they want.
More than half of renters (66 percent) are in a co-living situation whether it’s living with roommates, significant others or parents, according to data from San Francisco-based rental platform Zumper. And with rising rent costs and people getting priced out of major cities, it can be an affordable option.
“The trend of co-living continues to increase as rent prices continue to grow,” said Zumper CEO and Co-Founder, Anthemos Georgiades. “This is especially common amongst millennials where one in three spend more than 30 percent of their monthly income on rent. Sharing that cost is a very practical way to help make renting more affordable.”
Healy was initially hesitant about living with strangers, but when she found out she could save $1,600 a month on rent, and live in a bigger space, she decided to take the risk. She joined Outpost, a co-living club with homes in New York, New Jersey, San Francisco with expansion plans for Los Angeles. She pays $1,900 a month for her own room in a bi-level house that’s four floors that include co-working spaces, a spacious backyard and access to an outdoor rooftop view of Manhattan. And since roommates can leave after a month or two, she knew she wouldn’t be stuck with someone she might not get along with for long.
Share rooms from Outpost start at $750, and single rooms go for $1,350 a month. Outpost charges a full-month security deposit, which is given back in when someone leaves, and if perspective residents can’t afford it outright, the company partners with HelloRented a guarantor company, which fronts the security deposit so residents can pay a small monthly fee ranging from $10 to $20 instead.
Outpost joins a number of other housing startups monetizing off of co-living residences as an alternative to having roommates, dealing with mundane housing chores and living in more spacious quarters for less. The number of co-living units available from house companies in the U.S. is slated to triple to 10,000, according to a co-living trend report from real estate firm Cushman & Wakefield.
Starcity, a Bay Area real estate developer with coliving communities in San Francisco and Los Angeles, aims to maximize unused space in urban areas like transforming one-star hotels, unused commercial spaces or office buildings into residential buildings charging members between $1,400 to $2,400 a month for fully-furnished spaces. And PadSplit, started by Atlanta affordable housing developer Atticus LeBlanc in 2017, creates accessible housing by splitting bedrooms in single-family homes that are owned by investors into rental units that range between $435 and $650 a month, including cable, Wi-Fi, utilities and laundry, Curbed reported.
Haley says she’s made friends with fellow roommates through interactions in the communal kitchens where residents will cook together, host dinner parties or watch movies, she says the experience can feel at time like “’The Real World’ meets hipster” referring to the former MTV reality show where strangers are picked to live in a house and work together, in her case, in Brooklyn’s Williamsburg neighborhood.
“We always joke and say we should get paid to be on a reality show. Everyone is relatively around the same age, we all get along relatively well,” Healy said.
She plans to stay at the co-living location in Williamsburg until February and then transfer to one in San Fransisco.
While the co-living has been popular among millennials, real estate experts say the trend has attracted renters who experienced life events like divorce or a loss and maybe looking to downsize or meet new people. Then there’s also the aspect of the community, which attracts some empty-nesters like a woman named Deneece — whose story is featuring on PadSplit’s website — a member from Las Vegas who experienced loneliness after her son left the house
There’s also the affordability crisis where renters are getting priced out of big cities, Dana Dunford, the CEO of Hemlane, a property management and leasing software company that deals with works with some co-living spaces, said.
“There are millennials who want the experiences, but there’s more to it developing. You do see it becoming prevalent with older folks that have gone through a divorce and may want alternatives,” Dunford said. “The cities we’re seeing this happen in experience a huge affordability crisis.”
Dunford says people are attracted to the convenience factor of not having to worry about calling a landlord if something is broken, taking out their own trash or even cleaning up after themselves.
“When you live in one of these co-living spaces you’re not responsible for anything,” Dunford explained, adding that people are attracted to the luxury of being able to move into a space that’s fully furnished, save on moving costs and not have to worry about home maintenance. “It’s the notion of ‘do it for me,'” she said.
There are downsides to co-living. While a landlord may be able to get more money from people to live in a home, there’s still a high turnover rate and without a standard lease, they take on more expenses, like money spent on putting on communal living events. And developers have to build the space from the ground up with communal spaces, which can be a costly challenge when it comes to convincing investors that it’s worth it.
