Cushman & Wakefield’s New Coliving Report Offers Examination on San Francisco and Bay Area Multifamily Subsector

Joshua Deale • 6/5/2019
A housing crisis is raging across the U.S. As young professionals emigrate into major cities like New York, Los Angeles and San Francisco, a positive intersection between highly-educated workers; the concentration of corporate investment; and job opportunities has heated both renter and owner housing markets.

SF Golden Gate Bridge Night

Cushman & Wakefield has recently released a brand new report on coliving entitled, Survey of the Coliving Landscape, an in-depth report on this multifamily subsector and how it’s emerging as a favored, niche asset class. The report also provides additional information on key coliving operators, including those having a notable presence in San Francisco and other parts of the greater Bay Area, such as Common and Starcity.

Coliving is a type of intentional community of housing where multiple people share a single home with shared areas such as bathrooms, kitchens and living rooms as well as other amenities. Major operators in the space currently have 3,700 beds with another 9,300+ in the pipeline, with a high concentration in New York, Los Angeles, Chicago, Boston, San Francisco and Washington, DC.

In the San Francisco Bay Area to date, there are a couple hundred coliving beds run by mid- to large-community operators in the space such as Common and Starcity. Such operators aim to manage communities of dozens to hundreds of tenants. Over the next three years, this number will increase dramatically by an estimated 1,800+ further coliving beds. This is excluding the robust market for repurposing single family homes as coliving spaces, where firms such as Bungalow and Hubhaus currently have hundreds of beds around the Bay Area on their platforms.

Fueled by increasing affordability challenges and an expanding demographic of renters, coliving’s expansion has passed its early stages, and it now is a fully fledged niche asset class. Over the course of the next five years, significant capital will be deployed toward delivery of thousands of more beds across the world. As more companies seek to capture talent pipelines across a wider geographic area, more markets will become viable for coliving development. With increasingly higher housing costs in gateway markets, coliving options will see growth in official affordable housing options, with programs like ShareNYC providing a template for further public-private housing partnerships.

“The way we live is changing,” said Susan Tjarksen, Cushman & Wakefield Managing Director. “Goals of homeownership and a suburban lifestyle have given way to more urban and communal preferences for those entering the workforce. Coliving options will become more ubiquitous with recent college graduates seeking to join a community and learn about a city that they are living in for the first time. As new generations enter the rental market, preference will be centered upon coliving brands that provide convenience, affordability and a vibrant community.”

Individuals choose coliving for a variety of reasons. First, the cost of living in a shared community is less than in an individual apartment – approximately a 20 percent discount. Second, individuals who choose coliving also do so for the network of individuals with whom they can surrounds themselves. Much like an office building, the curated community in a coliving building fosters inclusivity that enables tenants to meet a variety of other people and expand their network. Firms that offer group activities within coliving spaces provide the opportunity for tenants to interact with other tenants, engage and build relationships. A third reason why tenants choose to colive is the ephemeral nature of community renting. Generation Y tenants are predominantly single, want flexibility and convenience and value authentic experiences.

Ric Russell, Executive Managing Director with Cushman & Wakefield’s Capital Markets in the Bay Area, said, “Residential rentals reflect the wants and needs of the tenant. Coliving reflects today’s acceptance of the fact more people nowadays, particularly the younger generation who have grown up in a more social, collaborative world, have less expectation of privacy and fear in interacting and creating new relationships with people they do not know well. They also tend to take more pleasure in new shared experiences. Take for example social media, in which people today appear more bold and comfortable to share things about themselves with perfect strangers.”

He added, “Cost savings, higher quality living conditions and amenities, and no long-term commitment make coliving an ideal living opportunity for many. Coliving is currently seen in urban settings where there tends to be a higher cost of living—especially for home ownership—and an abundance of young professionals. There is no reason why it will not migrate to suburban locations as well and also expand to include older tenants. I am currently working with several developers who are planning coliving buildings.”

Russell concluded, “Coliving is not a temporary ‘experiment’, rather a housing alternative that satisfies the wants and needs of today’s and tomorrow’s residential tenants. It is here to stay.”

Survey of the Coliving Landscape explores the state of coliving, strategies and funding of key players and future growth potential. Experience the full report here

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