Atlanta Co-Living Firm Pivots To Building Affordable Housing Owned By Community
Two years ago, a local firm jumped into Atlanta's nascent co-living scene with a project in the Sweet Auburn Historic District in Downtown. Now, that company is changing tack with a $7M Southwest Atlanta mixed-use project with designs to ultimately be owned by the surrounding community.
The Guild purchased 918 Dill Ave., a 15K SF 1930s-era commercial building for $450K in November, according to Fulton County deed records. In turn, The Guild plans to develop a project with 7K SF of ground-floor retail below 18 new multifamily units that would be permanently kept as affordable, said Antariksh Tandon, the director of development and design for The Guild.
The firm filed for a permit with the city of Atlanta June 2 to begin redevelopment of the empty building.
The Guild plans to offer shares of ownership of the building to the 10,000 households in the Capitol View neighborhood starting at $10 per share, Tandon said. Over time, as the debt and equity that financed the project's construction is paid back, area residents will become its final owners, getting to participate in the upside of the neighborhood's gentrification.
“The way the real estate market works, it's similar to a Ponzi scheme," said Dani Brockington, the community engagement and programs manager for The Guild. "Prices have to continue to go up. Communities have historically been marginalized ... and cannot play that real estate game in that same way. It's unsustainable."
The project represents The Guild's pilot into community-owned commercial real estate. In 2019, the firm operated a co-living facility at 340 Auburn Ave., owned by Atlanta-based Good Places. Tandon said The Guild opted out of managing the co-living facility once its lease expired and switched strategies to cooperatively owned real estate.
The Guild's thesis is to allow area residents to benefit from rising real estate prices in the community by controlling the ownership shares, which can be redeemed for cash after a certain holding period, Tandon said.
Traditional financing forces developers to seek market-rate rents to cover their debt, which threatens to push poorer residents out as more and more housing goes up in price.
“The root of the problem is how the building is acquired and developed in the first place,” Brockington said. “It was the process of operating that [Sweet Auburn] space that sort of taught us that, if affordable housing as an issue is going to be solved for, there's going to be something deeper. It has to happen on the developer side. There has to be an intentionality around the financing.”
It also allows the community to hold down housing costs as values appreciate, Brockington said, by keeping their apartment units permanently affordable. Tandon said unit rents will range from 60% to 80% of the area median income of Capital View. The neighborhood's AMI is roughly $34,400, according to 2019 U.S. Census Bureau data.
“This is one of those corridors that has long been neglected, but is seeing a lot of attention and investment,” Tandon said.
He added that rent appreciation will be capped at around 1% per year. After 15 years, a community trust made up of the local investors would fully own the project, Tandon said. He hopes to help residents ride a wave of gentrification in their neighborhoods instead of being victimized by it.
“Neighborhoods that have long been marginalized do not get to participate in the appreciation of their neighborhood,” he said. “Property prices are going to continue to rise. The idea is we want to have the residents of the neighborhood participate in that.”
Thus far, The Guild has commitments from two community financing firms to provide debt toward the development, and The Guild is in talks with initial equity investors as well, Tandon said, but he declined to identify the financing institutions.
The firm also has a letter of intent with the local kitchen cooperative Leaven Kitchen, which would operate a grocery store in a portion of the retail space, Tandon said, adding that initial conversations with area residents showed a desire for a local grocer.
Volatile construction pricing has been a hindrance to breaking ground. The Guild is in the final stages of shoring up construction material costs, with plans to break ground next year, Tandon said.
“I don't want to make this out to be a utopian project. There are concerns about rising costs, about financing issues,” he said. “We intend to start ordering materials in August.”
Tandon said The Guild is not averse to operating another co-living project in the future, but its focus now is spearheading this collectively owned commercial real estate development model that can be replicated elsewhere.
“For me, co-living has become a marketing tool where essentially how it is rendered, you're sold a smaller amount of space because you're told it's hip. And having to put up with a kitchenette,” he said. “It's essentially capitalism at its best.”