Co-living is becoming a growing segment of South Florida’s multifamily market amid increased competition from each other and from conventional apartment developers, according to a group of such developers and operators.
“Sure, there’s competition. But it’s a big opportunity,” said Brian Lee, senior director of real estate at Common, on a panel on co-living and other new housing trends targeting millennials at The Real Deal’s Sixth Annual Miami Real Estate Showcase & Forum on Thursday.
Common, based in New York City, operates about 1,000 co-living units nationwide and plans to add thousands more.
Lee said Common bedrooms rent for 15 to 20 percent less than a studio apartment and come with services as weekly cleaning service plus access to the Internet and a gym.
“It’s a super-crowded market” in downtown Miami, where apartment development has surged, said panelist Brian Koles, director of marketing and communications at Property Markets Group. “People aren’t necessarily finding us by looking for co-living. They’re looking for a place to live downtown for $1,300 a month.”
PMG developed X Miami, a 434-unit co-living project where the company rents by the bedroom – one of the first projects of its kind in South Florida. Each tenant has a private bedroom and bathroom and shares the kitchen and living space in an apartment with other roommates.
“Co-living is like living with roommates, rebranded,” Koles said. He did not disclose its occupancy rates but said X Miami had “stabilized” during the initial lease-up period of the project. Koles also said the development at 230 Northeast Fourth Street in downtown Miami is the first in a series of PMG co-living projects in other markets that bear the company’s three-year-old “X” brand.
“For us, it has become this showpiece that is allowing us to scale nationally,” he said. “It has proved the [business] model, showing our investors and other partners that we can put roommates together and they’re actually going to pay their rents and get along.”
Several panelists said co-living properties are attracting tenants across a broad range of ages. Co-living operator Ollie, for example, has tenants ranging from millennials “right out of college to people in their 70s,” said panelist Andy Levin, Ollie’s director of real estate partnership. He said Ollie uses a roommate-matching system “comparable to a dating app.”
Co-living and short-term rental operators face competition not only for tenants but also for the best locations, said panelist Marley Dominguez, managing director of real estate at Sonder, which offers vacation apartments with hotel-style services.
“I would say competition is high in the alternative accommodations space. Short-term rentals, co-living, housing as a service – there’s a variety of products that are going after somewhat the same real estate,” Dominguez said.
San Francisco-based Sonder appears to have plenty of cash to spend on real estate: In July, Sonder closed on a $210 million round of funding that valued the company at $1 billion. “We’re expanding to 15 cities right now, mainly in Europe and the Middle East,” Dominguez said.
Heightened competition in the co-living business is “healthy right now for the space because it means more credibility, especially from an institutional investor’s standpoint,” Levin of Ollie said. “It allows us to provide more data points to show this is not just a fad, it’s actually here to stay. It’s just an extension of multifamily.”