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Scott Levine wakes each morning in his tiny room in the Alta apartment building in Long Island City, N.Y., across the river from Manhattan. He gets dressed, brushes his teeth in an attached bathroom, and folds away his Murphy bed.
Mr. Levine, a 30-year-old marketing manager, shares the rest of his apartment—basically, a kitchen—with two roommates. Once a week someone from Ollie, the startup that manages his apartment, comes to change his sheets and towels, even top up his toiletries, all of which is included in his rent, which is around $1,800 a month for his 98-square-foot room.
A “community-engagement team” at Ollie helps plan Mr. Levine’s social calendar. A live-in “community manager”—sort of like a residential adviser for a college dorm—gets to know Mr. Levine and everyone else living on the 14 Ollie-managed floors of the Alta LIC building, known as Alta+, and finds creative ways to get them engaged in shared activities, like behind-the-scenes tours of Broadway shows or trips to organic farms.
“Life in general can be a bit of a headache,” says Mr. Levine. Thanks to Ollie, he adds, “Everything is done for you, which is convenient.”
The outside of the Alta LIC building, known as Alta+, where Mr. Levine lives. PHOTO: GIACOMO FORTUNATO FOR THE WALL STREET JOURNAL
Mr. Levine and thousands more across the U.S. are part of a growing phenomenon that tech and real-estate companies are hoping to cash in on: co-living.
Co-living means roommates—usually single, usually in their 20s or 30s—plus amenities ranging from cleaning services to shared social calendars. It also means, in practical terms, fewer square feet than a traditional apartment, more people in shared kitchens and lounges and, as a result, more affordable rent.
People have divvied up urban living quarters since at least the days of ancient Rome. A corner of that market is now app-powered and designed to appeal to those accustomed to ride-hailing, same-day delivery and made-for-Instagram experiences.
The result is developers sinking hundreds of millions into new properties or rethinking how they manage existing ones, doing to apartments what co-working giant WeWork does to offices. Their partners are startups such as Ollie, Common, Starcity, PodShare, WeWork’s WeLive and others. Together they’re discovering that one way to wring out more dollars a square foot is to transform buildings into places that fulfill not just residents’ need for shelter, but also community.
Joseph Watson enjoys the golf simulator, above, that comes with his co-living apartment in the Long Island City neighborhood of Queens, N.Y. In addition to the gym, below left, there is also a pool, below right. PHOTOS:GIACOMO FORTUNATO FOR THE WALL STREET JOURNAL
For city-dwellers accustomed to living cheek-by-jowl with people whose names they’ll never bother to learn, this might seem strange. But for young people still forming their postcollege friend groups—in an era when participation in civic life is down and going to a bar can mean huddling in a corner swiping on Tinder—it makes sense. So much sense that people put up with apartments so small they’re called “micro.” But hey, free shampoo.
Real World: Millennial Edition
Even the largest of these startups is still small compared with big-city real-estate developers. Common manages 20 co-living properties in six cities, including the ones where co-living is more common, like New York, L.A. and Washington, D.C. It has a total of approximately 650 members, says Chief Executive Brad Hargreaves. Common’s units generally follow the co-living model of private bedrooms and shared common areas, and are intended to be about 20% cheaper—per resident—than efficiency apartments in the same area.
“Our audience is people who make $40,000 to $80,000 a year, who we believe are underserved in most markets today,” Mr. Hargreaves says.
Other startups are banking on managing existing houses and apartments, Airbnb-style. Bungalow, which just announced $64 million in funding, wants property owners to offer space to “early-career professionals” looking for a low-maintenance place to stay. It charges rent that’s “slightly higher” than what it pays those owners, a company spokeswoman says. It currently maintains over 200 properties—housing nearly 800 residents—across seven big cities, says co-founder and CEO Andrew Collins.
As with Common and Ollie, Bungalow advertises that it furnishes the common areas in its homes, installs fast free Wi-Fi, and cleans them regularly. The company also organizes events and outings to help you “build a community with... your new friends.”
At the heart of all of these startups is a technology platform that does double duty. Ollie’s Bedvetter system shows apartments to potential tenants, and also shows who’s already signed up to live there, with links to personal profiles. Bedvetter can even connect people into pods of potential roommates before they begin their apartment hunt.
“It’s like online dating,” says Mr. Levine. His roommate, Joseph Watson, 29, also in marketing, says it’s like eHarmony or Match.com rather than Tinder, since the platform is designed to pair people for the long term.
Ollie used Bedvetter to fill its Alta+ development, and has grander ambitions to make it a go-to service to match roommates with any available housing, says Ollie co-founder and CEO Chris Bledsoe.
Micro Economics
Part of what’s driving the co-living movement is that developers make more money a square foot, even as they charge customers less in total monthly rent than they would pay for a studio or even, in some cases, a comparable roommate situation. That flat price—which also includes timesaving services and a social element—gives residents the perception of a better deal.
Joseph Watson pulling out his Murphy bed from the wall in his unit at in the Alta LIC building. PHOTO: GIACOMO FORTUNATO FOR THE WALL STREET JOURNAL
The Alta LIC building also has conventional apartments, but the co-living units are filling up faster, says Matthew Baron, one of the Alta LIC building’s developers. What’s more, he adds, he can get more than $80 a square foot for Ollie units compared with around $60 a square foot for the others, even though the Ollie ones are on the lower, less-desirable floors.
Even if they succeed, co-living startups are unlikely to solve America’s affordable-housing crisis. To address the “vast” gap between housing demand and supply, New York City is spending $8.2 billion, and Sen. Elizabeth Warren proposed the American Housing and Economic Mobility Act, which includes $477 billion in federal spending.
One problem with co-living is that community management can be tricky. At L.A.’s PodShare, potential tenants must be vetted beforehand and can be kicked out for bad behavior. “We’ve hosted 25,000 people at this point, so there’s bound to be some problems,” says founder Elvina Beck.
For Teiko Yakobson, who lived in a Common building in Brooklyn for a year, the community vibe broke down after Common eliminated the paid “house leader.” “We all just became strangers, and it was no better than living in any other apartment,” she says. Common replaced this program with “centralized” community management at the corporate level, which is “more coherent,” says Mr. Hargreaves.
When it does work, co-living can re-create the kind of communities tenants seek online—ones grounded in common interests and shared socioeconomic status.
Mr. Levine, who not only lives in a co-living building but also works in a co-working space—and in whose social circle most people do either one of those or the other—is aware that, while this isn’t for everyone, he is hardly a standout. “One thing I’ve heard before is that I’m a stereotype of a New York millennial,” he says.
Scott Levine and Joseph Waston talking in the kitchen of their co-living apartment in Long Island City. PHOTO:GIACOMO FORTUNATO FOR THE WALL STREET JOURNAL
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Write to Christopher Mims at christopher.mims@wsj.com
