Dana S. Brody

Co-living is rising in popularity for both renters and investors. For investors, co-living offers 30% net rent premium compared to traditional apartments, according to research from JLL. With renters showing strong demand for the product, capital sources are also increasing allocations as well. In 2018, global fundraising for co-living increased 182%, and in 2019, funds have already raised $300 million.

“Co-living offers high-density and high-revenue potentials as traditional rents are seeing historic highs, potentially offering a win-win opportunity for both landlords and tenants,” Dana Brody, SVO at JLL, tells GlobeSt.com. “Net operating Income is also higher, making it very attractive to multi-family operators as they are able to generate a much higher rent per unit. Units that are being offering as a co-living opportunity can garner up to 40% more than a traditional rental, making it a very lucrative proposition for owners looking to increase their bottom line. Co-living renters get reduced rents and increased flexibility, while also providing a more communal living experience, which millennials seem to prefer.”

For renters, the major benefit of co-living concepts is the lower cost for high quality. As a result, rent control initiatives could impact co-living demand, and more and more Southern California cities are adopting rent control ordinances. “Any expansion of rent control on traditional multifamily would make studios and one bedroom apartments more competitive financially over time with co-living offerings,” says Brody. While rent control is an obstacle, rising rents in major cities will continue to fuel co-living demand. “As rents continue to rise in major cities, I see co-living as a great option for renters looking for a place to live with a lower cost basis in a highly amenitized communal living experience,” adds Brody.