Co-living, What Is It And Does It Have The Potential To Disrupt The Suburban Housing Market? 

As a follow-up to my colleague, Ian Brown’s article entitled Coworking in Chicago and Its Suburbs , this posting dives into the growing trend of co-living and whether it will follow in the footsteps of coworking.

In the last decade, we have seen that coworking has become more than just a trend. As evident by coworking landlord WeWork, who reportedly has annual revenue exceeding $1 billion, raised $8 billion in private equity, and currently boasts a $21 billion-dollar valuation, it’s safe to conclude that this form of shared work/office space concept is here to stay. What is not as certain is whether a similar co- living concept in the housing market will follow suit and become the next disruptor in apartment rental markets.

What is Co-living

Coliving.com , provides its own dictionary definition as follows:

Co-liv-ing

noun

1.Shared housing designed to support a purpose-driven life.

2.A modern, urban lifestyle that values openness, sharing, and collaboration.

Synonyms: intentional living, intentional community, cohousing, modern digital nomad.

(Coliving.com. What Is Coliving ? June 7, 2018. https://coliving.com/what-is-coliving )

‘Co-living’ is an umbrella term for different types of ‘co-housing’ setups, and can loosely be defined as a home, where two or more unrelated people live together, whereby each person signs their own lease for a private bedroom, and often bathroom, within a residence. However, in addition to the private accommodations, residents, or members as they are often called, share common living spaces, such as a family room, dining area, kitchen, and recreation facilities. Typically, co-living includes fully furnished apartments, down to bedding and kitchen utensils, and may include such amenities as housekeeping, laundry, Wi-Fi, and planned social activities. Critical to its definition is that co-living encompasses shared accommodations initiated by an external agent, such as a developer or entrepreneur.

Co-living Business Model

While still developing, the co-living business model, seen by many of the startups in the sector such as Common, The Collective and WeLive by WeWork, has avoided owning and/or developing the real estate projects. Rather, they have partnered with more established developers and landlords, becoming effective management companies operating on behalf of the owners of these properties. To date, the target market for co-living largely includes millennials who are looking for affordability, flexibility, ease of use, and community.

Why is Co-living Advantageous

Today, young professionals are more urban than ever before, which is where co-living has traditionally developed. As homeownership continues to decline and apartment rents continue to rise, a gap in the housing market for alternative housing options has emerged. In addition to these existing market conditions, co-living provides a solution to privacy without the isolation, flexibility, efficiency, affordability, and community which may all add to its continued growth and adoption.

Future of Co-living

While co-living continues to evolve, one has to contemplate whether this trend is sustainable or desired outside of rapidly urbanized and youthful populations. Stated differently, will co-living eventually move from concentrated urban areas such as San Francisco, New York, and Chicago, to more suburban markets. Co-living almost by definition demands fewer resources and has the potential to be flexible and adaptive with people’s needs as they age, which may lend itself well to seniors who do not require assisted living but could benefit greatly from co-living situations. This is likely where the continued trend of co-living may begin to develop in the suburban markets thereby requiring changes to typical land-use and zoning laws in many municipalities throughout the Chicagoland’s suburbs.

Getting Zoning Approvals for Innovative Uses

The emergence of co-living is a great illustration of how the housing market has changed and what new opportunities are available for many of our clients in real estate development and property management. In many cases, zoning will be a challenge to these new types of land uses. Shapiro & Associates Law has helped clients procure entitlements for many innovative and developing land uses. We are happy to discuss any questions you may have about getting approvals for your own business ideas.