Co-living situations have been around for a long time, but in this era the opportunities have been streamlined as cities increase accessibility and startup companies cater to the demand. I remember around a decade ago that rent prices were about half of what they currently are where I live in the east Bay Area. Now with so many people living here and property prices unobtainable for many, the cost of rent and housing affordability has become a hot topic. Co-living in the Bay Area has always been popular, especially in the informal annual roommate arrangement. Now companies are specializing in creating co-living environments that work with all the compatibility and amenities required. Many of these startups are even purchasing entire buildings and working with cities to have them rezoned in order to contribute more housing in densely populated urban areas.
The number of bedrooms available or in development across the country increased 20 percent to 74,000 in 2022, from about 62,000 in 2020. This data reflects that there is an increased demand and that many landlords are adjusting their rentals to become co-living units. Some companies are even buying old motels or hotels and completely updating them with everything a new roommate would be looking for in a property. The involvement of startups in this newer industry has not been completely smooth sailing as many have exited the business or faced some scrutiny. The other hurdle is that many cities have outdated laws that make it harder to streamline co-living spaces. In one example, New York does not currently allow locks on bedrooms for co-living spaces because of an older law that would require the space to be moderated like a hotel.
These kinds of requirements are quickly being reverted and cities are championing themselves as being the solution providers to the current housing shortage. I think we will continue to see more investors and developers move into building these kinds of properties because they are more profitable per square foot and there is more pressure being put on cities to accommodate to the needs of renters. Have you ever lived in a co-living situation before? Have you ever considered investing into a home or development that catered to co-living needs? Please share your thoughts!