living spaces

The Co-Living Start-ups That Survived the Pandemic Are Merging — and Flourishing

Photo: Johannes Eisele/AFP via Getty Images

Since it took off about a decade ago, the co-living industry has gone to great lengths to sell an image of communal bliss: not just a sleek furnished bedroom in a hassle-free apartment share, but housing as a means to creative, social, professional, and even spiritual fulfillment. Pure House, for example, boasted of designing “experiences that empower our members to thrive.” Starcity claims to be “bringing community back to the city.”

In reality, the industry flourished not because co-living filled the void left by, say, the decline of religion, as WeLive’s co-founder Miguel McKelvey once implied. Instead, it filled the void left by the decline of boarding houses, turn-of-the-century single-sex residency hotels, and SROs. Finding an apartment share on Craigslist or Gypsy Housing is miserable and difficult, especially for those who need to move to a place like New York quickly to start a job — or, even more damaging to a renter’s prospects, find a job. There are scams, deals so bad they may as well be scams, openly antisocial roommates who resent having to share their apartments, and the general uneasiness that comes with signing a binding legal contract with strangers.

For years, even as established real-estate players entered the field and it became clear that large, ground-up co-living developments were the direction the industry was heading in, the vast number of co-living companies seeking to distinguish themselves in an ever-more crowded marketplace meant that the over-the-top utopian rhetoric proliferated. If you were a minor player with a master lease on a few properties, charging a premium for bundling in olive oil, internet, weekly housekeeping, and West Elm furniture, it made sense to play up how life-changing the spaces could be. During the pandemic, as numerous co-living companies went under and consolidated — earlier this month, Common took over Starcity’s co-living operation of some 7,500 units — it has become abundantly clear that co-living was a business, not a utopia. The capitalist commune was, in the end, far more capitalist than commune.

At first, it seemed like the pandemic would prove disastrous for the industry — tiny bedrooms in all-inclusive apartments shared with strangers and the suspension of perks like housekeeping, movie nights, and rooftop wine tastings did not pair well with quarantines and work-from-home policies. But in reality, the co-living industry has prevailed by offering what it had always really offered, but often been too afraid to admit: convenience; apartments that, if not cheap, were still cheaper than studios or getting stuck owing a roommate’s share of the rent; and, often, the ability to move out on 30 days’ notice if you found something better (or lost your job). By last fall, occupancy rates were back to low-90s percentages and are expected to hit the high 90s by this fall, reaching their pre-COVID levels, according to Susan Tjarksen, an expert in co-living and multifamily markets at real-estate analytics firm Cushman & Wakefield. “We always said from the beginning that co-living would do very well in a downturn. It did better than class A — class A got hammered,” said Tjarksen, referring to the luxury-apartment sector. “Co-living held its own in all metrics because it’s very much a value play. Co-living, you come for the cost and you stay for the convenience and the community.”

The pandemic helped expose which co-living companies had relied more on branding than solid business models to grow. Among the casualties were Roam, which catered to digital nomads; HubHaus, a venture-backed start-up that leased large single-family homes to young professionals before it imploded (spectacularly) last fall; and Quarters, a German company whose $300 million U.S. expansion ended in bankruptcy this February (it still operates a few buildings in Europe). Not coincidentally, all of them relied on master leases with landlords — an easy way to become a co-living operator, but, as it happened, disastrous when vacancies in expensive cities soared and rents fell.

Other major players consolidated: Starcity acquired its rival Ollie’s assets, and was in turn acquired by Common (though not its real-estate-development side). Outpost Club, a smaller New York and New Jersey–based operation, took over what was slated to be Quarters’ 160-bed Williamsburg flagship during the pandemic. The upheaval was not surprising, according to Tjarksen. “We anticipated that there would be a shaking of the tree. We always thought this consolidation was coming. COVID made it happen in one year instead of five,” she said.

But was all the upheaval enough to shift the co-living conversation once and for all, to end all the talk of consciousness-expanding dinner parties and neo-homesteading?

In a November New York Times article about people who’d moved into co-living apartments during the pandemic, the reasons included, “It was very straight to the point and easy,” “It was definitely the easiest move-in experience I’ve ever had,” “I came here because it was a very attractive price with very attractive features,” and “He was drawn to the rent-by-room model because he wouldn’t be responsible for replacing roommates.”

Many co-living pioneers have embraced the opportunity to drop the quasi-hippie mantle. For years, Common has always been a property manager (it doesn’t own the co-living building it operated) — but it now embraces the role, describing itself as “a residential brand and operator that designs, leases, and manages multifamily properties to appeal to today’s renters” — which allowed the company to achieve the scale that many of its competitors have not. These days, only about half the properties it manages are co-living spaces; the other half are private apartments. Brad Hargreaves, the CEO of Common, credited Common’s pandemic-era success with the fact that “we were always affordability fundamentalists. We’ve been very straightforward that this is about affordability, this is about convenience. If you’re not able to present a really strong value proposition, I don’t think the people who looked at it as an intentional community did as well.”

Years ago, Hargreaves told New York that they had given up on Sunday potluck dinners because “no one really cooked, so it was mostly ‘Seamless potluck.’”

Chris Bledsoe, a founder of Ollie, which once launched a stand-alone social club to run events for its apartments, is now a co-founder of Dandi, a British company that, along with Dukelease, is opening a flagship co-living building in London this fall. It will have 367 efficiently designed studios and two full floors of shared communal space for members, but no shared apartments. Rather than social programming, Dandi’s focus is on vertically integrated design and construction, including specialty transforming furniture. “What I learned running Ollie is that social programming and housekeeping alone are not enough to make the business model work,” he said.

Other ground-up co-living projects are also wrapping in what is referred to as “blended living” — that is, traditional studios and one-bedrooms, which both make the buildings easier to finance and allow them to retain residents who have “outgrown” co-living, either via coupling up or, as is often the case, making enough money that they can afford a luxury building without having to deal with roommates.

Still, there are holdouts. Treehouse, in L.A., is exuberantly utopian: “Treehouse is not only a place where you lay your head and store your stuff, it is a place and a space to explore through dinners and relationships, partnerships and collaborations, and at times a spoken and unspoken support, nurturing, and inspiration.” It claims to have done just fine during the pandemic and is now “trying to cure L.A.’s loneliness.” There’s also The Collective, whose stated mission is to “build and activate spaces that foster human connection and enable people to lead more fulfilling lives.” But the company’s New York City location, the Paper Factory, is for short-term stays only (less than 30 days), which waters down the communal experience some. And The Collective is now apparently under some pressure, exploring a sale.

Ultimately, the ethos of co-living, in New York at least, may be best captured by Outpost Club’s tagline: “Easy move-in. Easy living.” The residents I talked to in a Bed-Stuy Outpost apartment a few years ago didn’t have any illusions about becoming best friends with their roommates or finding inspiration or themselves via co-living. They just needed short-term housing — a safe, clean, friendly-enough space to stay for their first few months in the city, before they moved back to wherever they were from or found a cheaper apartment to live in, either alone or with their actual friends.

Co-living Consolidates and Sheds Some of Its Utopian Vibes