Uniti Montrose Operators Predict Houston's First Big Co-Living Project Won't Be Its Last

Nine months into the operations of the first major co-living project in Houston, the property is only about half full.

But after a slow start and an early snafu involving Uniti Montrose’s management company going bankrupt and shutting down, the company is ready to turn the page and prove the city's appetite for micro-apartments is more than theoretical.

Uniti Montrose has since handed leasing responsibilities over to PeakMade Real Estate, which plans to close the gap from 55% preleased to closer to 100%. 

And despite being first to market and encountering a learning curve about how co-living functions, its operators believe it won’t be the only such option in Houston for long, anticipating the development will inspire others to jump on the trend a February study suggested could fill a critical housing niche and solve Downtown Houston's obsolete office issue. 

“I would expect in the next five years that you would continue to see more of those concepts, whether it’s a full-blown 100% co-living property or it’s going to be a portion of the building,” PeakMade Director of Client Services Christopher Warner said.

Developed by Civitas Capital Group and The Shelter Cos., the six-story Uniti Montrose opened in late June at 701 Richmond Ave. It offers 374 leasable bedrooms through a mix of traditional studio, one- or two-bedroom units and three- and four-bedroom units designed for co-living. Traditional studios range from about 375 SF to 385 SF, while larger co-living units are between 1,100 and 1,360 SF. All units are fully furnished. 

As in a traditional roommate situation, tenants in co-living units share a living room, laundry facilities and a kitchen. Unlike the standard setup, they pay separate rents by the bedroom. Co-living rents start at $1,150 per bedroom per month, plus a $200 “lifestyle fee,” but that includes all utilities, WiFi, furniture, housewares like dishes and cooking utensils, necessities such as laundry detergent and paper towels, trash pickup and a twice-monthly cleaning service for the common areas. 

Community amenities include a fitness center, a yoga room, coworking space, a podcast room, a craft room, a library, a pool and a sky lounge.

Smaller residences in a co-living setting aren't for everyone, but they offer an affordable housing solution for young professionals and people in transient phases of their lives, Warner said.

Current residents are split about 50-50 between traditional units and co-living units, said Sam Owens, PeakMade regional vice president for multifamily and co-living assets.

“You get a lot of leads that do know what co-living is. They’re interested in all the benefits of individual leasing and just the competitiveness of the price,” Owens said. “Others are searching ‘new apartments in Houston’ specifically in this area, and they’ll come in.” 

Leasing staff is sometimes able to convert prospective tenants interested in traditional units into co-living, largely because of the cost savings, she said.

The concept of having roommates in a co-living setting is popular in denser cities like Los Angeles and New York City, though it’s still quite new to Houston. But it has been well received, especially given that Montrose tends to be a progressive neighborhood, Owens said. 

“There is always going to be some element of education,” she said. “You’ll get some calls where they’re going to see the price of a co-living unit and think that’s for an entire four-bedroom apartment … [but] most people know as they’re calling to inquire for an apartment that this is a co-living community.” 

Uniti Montrose’s first year of lease-up was slowed by Common Living, one of the largest co-living firms in the country, declaring bankruptcy and ceasing operations in June. That led to a management transition during the busy summer leasing season.

Now that it has taken over leasing, PeakMade is confident going into the next busy season. The company is also betting that going forward, developers put co-living concepts in portions of their buildings, whether it is 25% or 75%, Warner said. 

“Co-living does solve a need in the market as the general cost of living, including your housing, your food, your goods and so forth, goes up,” he said. “This is going to be a really good way to keep renting and leasing velocity to all different pinpoints of a renter, what they are able to afford at the end of the day.” 

In a report last month, The Pew Charitable Trusts and Gensler laid out a road map to converting decades-old Downtown Houston office buildings into residential buildings with dorm-style micro-apartments and shared amenities.

These apartments would differ from the Uniti model because entire floors would share bathrooms, laundry facilities, kitchens and living rooms, adding another level of “co-living.” 

But given that 40% of the 611,000 renters in the Houston area are single-occupant renters, it could be a realistic — and in-demand — solution. The study offers a starting point for developers that may be interested in these types of conversions, Gensler principal and Senior Living Leader Brooks Howell said.

Multifamily construction starts have slowed in Houston due to a huge supply wave delivering and construction financing being hard to secure. In a few years, however, Warner said co-living could be a much bigger part of developers’ plans.  

“At the end of the day, it serves the purpose of a certain renter profile,” Warner said. “The cost of living and rent is not going down drastically enough for that to change in the next five-year period. I would not be surprised if you see … more projects, whether it’s in Houston or any of these bigger markets, where developers are going to give it a whirl and see if there’s traction there.”