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USA Real Estate Blog

Can Common crack the coliving code?

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When 26-year-old Christian Jenkins, a creative strategist at Manhattan-based Vox Media, decided to move to Brooklyn a little less than two years ago, he wanted affordable rent, community, and stress-free living. Normally, that’s a formula for disappointment in a high-priced, high-demand neighborhood, especially if you need to find roommates. But Jenkins decided to try Common, one of a growing number of companies promoting coliving, where tenants pay for a bedroom, shared common space, and the promise of community.

After 18 months of staying at a four-story, Common-managed building in Crown Heights, Brooklyn, where he shares a suite with four other roommates, Jenkins believes he’s found what he was seeking. His floor—which, when I visited last week, had the trappings of apartment-dwelling young professionals, including an ironing board in the living room, a roommate eating a dinner on the couch in front of a flatscreen TV, and a Sonos speaker in constant rotation—seemed like a standard, if well put-together, living space. Fully furnished by Common with furniture, basic supplies, and a few unobtrusive framed photos, the two-bathroom, five-bedroom suite seemed homey.

Jenkins, who pays $1,545 a month for his 13×15 room, says that those who look at coliving as something akin to a frat house or an adult dorm room don’t understand the value of the community engagement that occurs inside.

“A dorm is a place that’s never felt like home,” he says. “Common is a lifestyle change. This is a way of saying, there’s a different way I can live, there’s an alternative.”

Jenkins believes that Common specifically, and coliving in general, fill an important gap in the rental market, one that more and more companies are trying to bridge. Young adults, increasingly mobile and drawn into urban areas, find affordability and forming a community big challenges when moving into a new city. Offering shared expenses and a sense of belonging, coliving aims to fill that gap.

Ryan Fix, a former coliving operator in New York who now runs Pure House Lab, a members collective of coliving spaces worldwide, sees Common and its competitors as a growing industry that’s “solving a big problem.” He believes Common, which is operating 13 homes in New York, Washington, D.C., Chicago, and the Bay Area, has devised a solid business model for a tricky concept, one that he believes will increasingly see competition from other businesses and even hospitality companies (WeLive, the residential side of coworking giant WeWork, already runs coliving spaces in D.C. and New York and recently announced a forthcoming location in Seattle).

“What people are looking for is a transformational experience,” Fix says. “They’re looking to transform their lives in some way, and they’re coming to coliving to support that. Beyond the business opportunity, I think it’s massively transformative for society—so many people are moving into cities and people are lonelier than they’ve ever been before.”


The kitchen in the Common house in Queens; concrete countertops are an investment in long-term, low-maintenance units.
Common

The answer is operations

Common was founded in 2015 by Brad Hargreaves, a tech entrepreneur who had successfully built General Assembly, an independent school geared toward teaching in-demand digital skills. He found that his diverse student body shared a common challenge—finding a room and roommates—which inspired him to start the combination landlord/manager/community organizer.

According to Hargreaves, the company is in the middle of a growth spurt, with a growing team of 50 employees and an expansion plan that includes opening an average of one new home a month for the rest of the year (Common recently opened a new building in Queens, and a 45-bedroom home in Oakland will open later this summer).

Currently, between the four metro areas where Common operates, it has 450 beds, and receives up to 1,000 applications a month, mostly for space in New York, where it has the largest footprint. Vacancy is less than one percent, and every building is cash-flow positive. Since the company only looks to purchase entire buildings in neighborhoods near transit, Hargreaves says the biggest bottleneck for growth is adding inventory.

Hargreaves believes there are two main secrets to Common’s success. Price—this is real estate—is a deal breaker. To make Common attractive, especially in pricey urban markets, room and membership fees need to be under $2,000.

“We’re serving a very underserved part of the market, people who make between $40-$100,000 a year who live in big urban centers. So many developers are producing identical inventory, glass towers where studios start at $2,200. If your budget is below that, there are actually very few new housing options for you.”

While Jenkins’s $1,545-a-month rent may seem high at first, with the cost of an average two-bedroom apartment in the neighborhood hitting $2,515, he feels it’s a good deal when everything else is taken into account. It’s not just rent. It’s membership, which covers Wi-Fi and utilities, along with weekly cleanings, basic supplies, on-site laundry, and access to social events at Common spaces. The apartment also came fully furnished (a mix of tasteful yet unobtrusive pieces), and he didn’t need to pay a security deposit or broker’s fee, sizable and annoying expenses for anybody moving into a New York apartment.


Rooftop space at a Common building in Chicago
Common

The second reason, and perhaps bigger, differentiator for Common is operations and service. This is where Hargreaves, who doesn’t have a traditional real estate background, believes the company takes a unique approach. Traditionally, he says, real estate developers want to make money on acquisition and sales, not operations. But Common is finding success in creating an operational model that makes sense, and reduces some of the biggest burdens for landlords: keeping tenants and keeping them happy.

Many of the design and business decisions are based around reducing roommate stress and making it easy to keep tenants within the Common system. Including cleaning and basic supplies in the cost of a room seems like a nice bonus, but for Hargreaves, it’s a way to prevent roommates from bickering over messes.

“We don’t do it to make life nice and simple for our members,” he says. “We do it to avoid disputes.”

Allowing members to switch between Common spaces easily without extra cost eliminates worry over getting placed with a random roommate (and, in part, helps explain low vacancy rate and turnover).

“On a floor with five people, if one person moves out, everyone is out extra rent for the month,” says Jenkins. “Here, there isn’t that expectation. One roommate is leaving, and we’ll get another without doing any extra work. Otherwise, it would be a shitshow.”

Architecture and interior design also play a part. During the tour of the new Queens house, Sophie Wilkinson, Common’s head of design and construction, said that the company has a series of brand standards, sort of like a hotel’s spec book, that they use when they work with contractors to renovate new spaces.

Wilkinson says the company’s system can be both very specific—there’s a precise ratio of members to fridge size, as well as a precise renovation budget based on square footage—to more general characteristics, such as seeking buildings with outdoor space. A small closet space has been added to each room, since storage was important (clutter leads to roommate quarrels), and surface materials, such as hardwood floors and concrete counters, were chosen for longevity.


Outdoor space at the Common space in Oakland
Common

Creating a space for community

In tech parlance, Common offers multi-tenant apartment living without the friction. According to Hargreaves, the company also makes the important distinction of not seeking to create the community, but to put tools in the hands of members to do it themselves, which include budget for member-organized events, building common space into each building (Jenkins’s house had a common basement, backyard, and roof space), and fostering building-wide communication via Slack, the messaging app.

Part of community comes from the tenant pool. Common staff, as well as members, repeated some variation of the self-selection idea, that those who want this kind of lifestyle tend to be extroverted. Hargreaves says the only way the Common tenant screening system differs from traditional applications is that it’s partially done online—”We are not about curating individuals”—and they just make sure everyone is aware of how a Common living space differs from a traditional apartment building.

Communication tools and common areas tend to do the trick, according to Jenkins. The community Slack contains various channels that help members connect: the “Ins and Outs” channel for those moving in and out of buildings (where new arrivals can make an introduction), and channels for each of the Common houses (which let roommates discuss plans or give everyone a head’s up that they’re having friends over). There are also social events, from Game of Thrones watch parties to Sunday brunches and rooftop parties, give Common members the chance to hang out without too much obligation or planning.


Shared space at the Oakland Common house
Common

Expansion plans

Hargreaves see Common continuing to expand, both in breadth (moving to more cities) and depth (adding inventory in popular locations such as New York City). The company set an ambitious goal to serve 25,000 members by 2021, and he’s not sure how many cities that may represent.

“Keep in mind, anybody can move between homes, so there’s breadth, too,” he says. “If you can sign up and move between 20 cities, there’s a much stronger value proposition.”

Challenges may come when Common moves into less-expensive markets, where room fees may be radically different than more expensive markets (this proposition may be tested in 2019, when Common opens a location in New Orleans). Hargreaves also would like to offer space for families (currently, couples, which make up 15 percent of Common users, can share a room and pay separate membership fees).

Sitting in his living room, drinking a beer, Jenkins seems pretty confident that the Common model can be replicated and succeed. He says it’s definitely necessary, fulfilling a social need in a society that has become less communal.

“People inherently are social creatures,” he says. “It’s the best way for us to grow our networks and thrive.”

*Editor’s Note: Curbed is a part of Vox Media, the company where Christian Jenkins works.



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