With General Assembly, cofounder Brad Hargreaves helped build a company that fills the gap between what’s taught at school and what skills are needed for work. Now, he wants to fill a similar need between dorms and leases. “The biggest problem that our students would always have at General Assembly is how do they find low-cost, flexible housing that has some of the same community values that we built,” he says. “Many of our students can’t qualify for leases.”
In response, Hargreaves quietly founded a coliving company called Common that will facilitate group living (or “coliving”) by screening roommates, paying utilities, setting up a kitchen, and providing shared supplies like paper towels and coffee. Residents at its first space, a 19-room apartment building in Brooklyn that is scheduled to open this fall, will pay for rooms on a month-to-month basis without a long-term lease.
Millennials are moving to urban areas at a faster rate than any previous generation, and the average rent rates in cities like New York and are at record highs. Even if a fresh graduate could afford an apartment in, say, New York, where the average non-doorman studio, by one estimate, costs $2,385 per month, landlords typically require two years of tax returns and an annual income of 40 times the monthly rent (so, in the case of the hypothetical studio, $95,400). If you haven’t been working for two years, don’t make a ton of money, are new to the city, or don’t want to be locked into a full-year lease, your best bet is finding roommates on Craigslist. Good luck with that.
It’s this unmet need in the market that has sparked a trend of coliving companies. Campus, previously the biggest company in the space, just announced that it will be closing its 30 spaces in San Francisco and four in New York. Pure House, in Williamsburg, has five locations. Krash has eight spaces throughout Boston, New York, and Washington, D.C. (some of these, its cofounder says, are intended to be temporary). WeWork, the largest coworking space, plans to launch a residential offering called WeLive later this year. These companies’ offerings range in amenities and programming. Krash, for instance, provides towel service and advertises itself as a “particle accelerator for people” with a “hand-selected global membership of leaders.” Campus takes a less catered approach by removing hurdles to group living, but allowing members to choose whom they live with and what events they plan. “People are getting priced out in great locations throughout the city,” says Bryan Woo, the director of acquisitions at real estate developer Young, Woo & Associates, who has been exploring the idea of opening a coliving space on behalf of the company. “They can’t afford it, but they still want to be able to live in a great location, still want to be in these essential areas, and that means there are people screaming for this.”
Though coliving companies differ in their philosophies, culture, and flavors, most of them focus on the idea of “community,” which is the same thing that separates coworking company WeWork (five years, 42 locations, $5 billion valuation) from desk-renting company Regus (26 years, 2,300 locations, $2.4 billion market cap). “Our hope is not necessarily that [community] is what convinces people to join, but rather what makes it sticky after someone has joined,” Hargreaves says. “We do think that once someone comes into our spaces and gets to know people, gets to feel it, that the community is going to be a major selling point.”
Common has two advantages over now-defunct Campus. One is that the startup will partner with real estate developers to buy buildings. Landlords can be predictably hesitant to rent to a company that rents rooms on a short-term basis. “It can be tough because landlords want to make sure that they’re staying in line with the law,” says Neeta Mulgaokar, a real estate broker who helped Campus rent its first property in New York. “A lot of them are resistant because they don’t want to be perceived as resistant to Airbnb and hoteling laws.” Even if landlords can see the advantage of renting to a coliving startup–having a relationship with one company instead of 20 separate tenants, for instance–the coliving company still has to pay rent, which includes the landlord’s profit. Owning the building will allow Common and its partners to keep more of the margin and maintain more control over the space.
Hargreaves’s role at General Assembly, which enrolls 4,000 students at a time in full-time and part-time courses at 14 campuses worldwide, is also an asset. When students ask about where to find flexible, affordable housing with community values, the school will now have an answer.