Apartment hunters in urban centers from New York City to San Francisco all face similar situations: securing a suitable space amid rising rental prices and a shrinking inventory of affordable housing.
Until fairly recently, changes in the demographic profile of urban dwellers went largely ignored by developers of residential properties and policymakers. Now, urban centers are beginning to rethink outdated housing models, attempting to adapt to today’s new realities of how city residents live and work.
Across the United States, housing continues to get more expensive while wages remain flat (Shierholz and Mishel). Housing already makes up the largest share of most Americans’ spending, and continued escalation in housing costs forces individuals to spend less on food, health care, utilities, and other necessities (JCHS 2015; Mills et al.).
Outdated housing regulations also play a role. In San Francisco for example, the most expensive rental market in the US according to Databox, historical exclusionary zoning policy has played a huge role in today’s housing crisis. Although many residents fight to maintain San Francisco’s exclusionary zoning, there are signs of a growing opposition, particularly among younger generations who’ve been almost entirely priced out of the market.
Even Local companies are getting involved, proposing to build their own multifamily housing developments to help ease the crisis for employees.
Moving Towards More Sustainable Models
Demographic trends and new zoning laws aren’t the only drivers of change. Americans are becoming increasingly sensitive to the sustainability of our urban environments, demanding eco-friendly options and finding comfort in occupying smaller spaces. New residential buildings are now being designed, developed, and managed with these factors in mind. Well designed co-living spaces that encourage sharing are growing in popularity.
According to Coliving Insights, co-living is still a very narrow proposition targeted at a specific demographic profile, primarily young city dwellers. This demographic is also attracted to co-living as some face budgetary constraints and others may be seeking a way to feel less isolated and more connected with their communities. Whatever the reason, co living enables a more sustainable lifestyle through the sharing of space and resources.
Global funding in the co-living space has increased by more than 210 percent annually since 2015, totaling more than US$3.2 billion, according to JLL. So far this year, $800+ million has been secured, with $283+ million in the pipeline, the data shows.
In the next few years the number of units offered by major co-living companies in the US is going to triple to about 10,000 according to a new report by real estate firm Cushman & Wakefield, which provides an in-depth look at the state of co-living.
According to this study, major co-living companies currently have just over 3,000 beds in the US. That supply has not been able to meet the demand.
Shared rooftop lounge in Quarters’ Chicago location Courtesy of Quarters
From the perspective of urban development, it is undoubtedly beneficial for cities to have more co-living buildings to deliver housing to more people for less space. Using space efficiently and creating unique environments are key for architects, developers, and interior designers working on co-living projects.
Not Just for Millennials
Co-living’s original intended target are millennials, despite the fact that housing needs extend beyond this demographic.
Trends indicate that older Americans are rejecting traditional senior housing models, seeking better options for communal living in rental properties, and recognizing the appeal of living/retiring in urban areas.
In thinking about how to house the millions of aging Americans in the coming decades, co-livings should be part of the conversation. They might be an ideal, affordable rate senior housing solution that results in simple and more active lifestyles.
There are new initiatives to make co-living a viable option to more demographics. In New York for example, the city has asked developers for less expensive co-living projects with its ShareNYC program, so it’s possible more affordable co-living solutions will come about in the next few years to serve more segments of the population.
Whether the shift toward co-living will help ease cities’ housing crises remains to be seen, but all indications show that urban dwellers, young and old are increasing their interest in this solution.