Julie Sorensen
Director, GRS | Corteq
(312) 476-7658
[email protected]
WeWork’s quick domination of shared offices scattered around the globe over the last few years has been big news. After all, it was reported that the shared-workplace company is worth $20 billion, and it includes not-so-startup tenants taking up its floors, such as Bank of America, IBM and Microsoft.
Now WeWork and similar firms are making inroads into the multifamily sector of commercial real estate. Operating as part hotel-part student housing, co-living complexes rent bedrooms with private bathrooms. The residents have access to communal spaces and services. The properties are typically amenity-rich, catering to residents seeking convenience and socialization.
But how much traction are they actually gaining?
In the case of WeWork, it now operates WeLive, which operates two properties, one on Wall Street, in Downtown Manhattan, and one in Arlington, Va. In its New York City location, studios start at just over $3,000 per month and four bedrooms are $7,600. Rooms come fully furnished, and other add-ons include: discounted utilities, Wi-Fi and cable; housekeeping; concierge services; shared common spaces; and other features. Tenants can live at its properties month to month, or just check in for a few days, like a hotel.
But though hype tends to trail every move of WeWork, WeLive hasn’t yet taken off as expected – about three dozen were reportedly forecast to be in operation by the end of last year.
All the same, there are several other companies pursuing a favorable ROI from communal housing.
Common, which bills itself to commercial real estate landlords as a property management firm, operates 16 properties in Chicago, New York City, San Francisco, and Washington, D.C. Medici Living Group based in Germany operates over 1,000 rooms in Europe and has opened a location in New York under the brand name “Quarters”.
There are other companies out there who have similar membership-based programs and are geared toward travelers, similar to youth hostels that can be found in popular cities and resort towns around the world. Roam offers locations in four countries. Its residents can move from location to location with as little as one –week stay.
Global Real Estate Experts points out that the amenities that many of these operations have in common areas, such as larger “chef” kitchens, conference rooms and fitness centers in urban areas where those would just be added costs to a renter of a typical apartment.
The jury is still out as to whether or not this concept will take off on any sort of large scale and if multifamily landlords are willing to participate. Financing may also be a challenge, as the lenders will need to evaluate the property as a business—much like a hotel or seniors housing. It could be ideal for younger people moving to big cities where they don’t know anyone, save co-workers, to live in a communal environment similar to student housing. It’s also helpful for those needing to move to a city and may not have enough time to locate a suitable apartment.
What do you think of this trend? Could communal, or transitional, apartment living succeed in any big way?
About GRS Group
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.
Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance. We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies and delivering customized solutions to assist our clients in achieving their investment goals.