Co-living assets—like all of housing—have been hit hard during the pandemic. Before March, co-living properties were rising in popularity, offering a 30% discount on gross housing costs on a per-lease basis, while operators generated 15% higher NOI than the industry average due to the increased density. According to a new report on the asset class from Cushman & Wakefield, co-living will only see increased demand post-pandemic, as renters look for more affordable housing options.

First, however, the asset class has to survive the pandemic. Like the general apartment market, co-living properties have seen a decline in rents and vacancy as well as rent collections. The Cushman & Wakefield report shows that co-living properties' savings dropped from 30% to 23.2% as a result, with average co-living rents from March to August falling 9.4%. While significant, the decline is still less than comparable studio apartments, which have seen an 11.7% decrease in rents. Overall, the impact on co-living has been less severe for co-living properties than for multifamily.

While rental rates have fallen, rent collections have actually held up better than market-rate apartments. During the pandemic, apartment owners have reported a decrease in rent collections from 4.5% to 5.2%, but in co-living properties, delinquencies have stayed below 4% through the pandemic. Class-A multifamily assets have had even higher delinquencies exceeding 8%.