Co-living as an emerging market : an assessment of co-living's long-term resiliency

Abstract

Co-living, while a relatively new concept for the real estate industry, has become increasingly pervasive within the United States over the past decade. This form of communal rental housing offers reduced personal and private space in exchange for certain benefits, including a 15-30% reduced rental rate when compared to studio units. Changing social and economic factors have led to an increased interest in this type of residential product among both real estate developers and tenants alike. Today, there are approximately 30 co-living companies operating in the United States with close to 3,500 rooms in operation (JLL 2019a). Furthermore, this growth is expected to accelerate as global funding for co-living has increased by more than 210% since 2015 and around 7,000 rooms are planned to open in the United States over the next two years (JLL 2019a). However, while the concept has gained traction, it remains a nascent product type within real estate. Even with high growth, co-living's long-term sustainability remains to be proven. This thesis uses a mixed-methods approach to evaluate the long-term resiliency of co-living as a product type. Our research provides insight into the various types of co-living business models currently active in the United States, and we conduct a thorough review of the international and domestic co-living markets. Financial models are utilized to assess the financial resiliency of co-living given potential changes to certain market conditions and demand drivers. We investigate the planning policies affecting co-living in targeted markets in the United States. The thesis concludes with a report on the market perception of co-living from real estate professionals and the general populous.