Co-Living Startup Neighbourgood Expands in San Francisco

South African co-living and hospitality startup Neighbourgood has grown to manage a portfolio of properties from Cape Town to California.

Neighbourgood entered the San Francisco market last year and has built about 1,000 units between San Francisco and Cape Town, including some notable residential properties here, the San Francisco Business TImes reported.

The company’s first purchase in the city was a Victorian home at 1409 Sutter Street, once the Mansion on Sutter luxury hotel. Neighbourgood bought the 144-year-old home in June for $4.8 million — below the advertised sale price of $5.2 million.

Neighbourgood also manages co-living apartment buildings at 2072 Mission Street and 1813 15th Street in the Mission District and 1856 McAllister Street near Alamo Square. The firm is under contract to purchase a hotel property in Union Square to provide a cafe and co-working amenities. The company targets its under-35-year-old demographic by offering amenities like common spaces, food and beverage and event programming.

“The two worlds of hospitality and multifamily are so far apart in traditional landlords’ eyes, whereas in reality, the customer really wants them to be a whole lot closer,” CEO Murray Clark told the outlet. “If it’s coming with intention and meaning, your rental invoice gets delivered with a lot more value.”

Neighbourgood is looking to upgrade the Sutter mansion, also known as the Payne Mansion, back to its public-serving glory. The company is searching for a local partner to create a full-service restaurant in a 3,600-square-foot dining space. The 12-room hotel spans 17,800 square feet and generated income of $766,293, or $63,900 per key, in 2023. It serves as the company’s San Francisco headquarters.

The company aims to double its worldwide portfolio over the next 12 to 18 months. Neighbourgood co-living tenants will have access to other properties in the network as well as bonus perks from membership partner companies. Neighbourgood’s next market is New Haven, Connecticut, where it expects to add about 300 units across 56 buildings to its portfolio in a forthcoming deal.

“We can’t really afford to get the real estate economics wrong,” Clark said. “At the same time, we’re building a customer experience that speaks to where the future is going.”

— Chris Malone Méndez