Co-Living A Catalyst For Growing Commercial Districts
In the battle for seamless work-life integration, convenience trumps commute. Professionals with the financial flexibility to do so are ditching the daily train into work for the office around the corner.
As co-living concepts crop up in business districts to meet the demand for live-work-play, young professionals are opting for communal living over long commutes.
Across New York City’s growing commercial hubs, creating an all-in-one solution has led to employees spending more time in neighborhoods, fueling their growth.
“These specific areas where co-working companies have been blossoming are primarily targeting the millennial workforce,” GFI Realty Services research analyst Justin Fitzsimmons said. “The millennial workforce in question contains a sizable amount of young people that are seeking an easy access, all-encompassing work environment.”
The expansion of tech, advertising, media and information companies in these business districts has led to the development of multifamily and retail in former financial districts. The employees these businesses attract demand experience-based living steps from their doors. Co-living, which combines the social atmosphere of a dorm with the amenities of a hotel, is the final piece of the mixed-use puzzle.
Lower Manhattan is a case study for former commercial districts morphing into the 24/7 communities in which co-living concepts thrive. The area has become a hub for TAMI companies. Condé Nast and Spotify have set up shop in their respective World Trade Center offices while global advertising firm Droga5 doubled its space at 120 Wall St. Since January 2012, 369 companies, taking up 9.4M SF of office space, have moved Downtown.
WeWork operates several co-working spaces throughout Lower Manhattan that cater to TAMI startups. The company unveiled its WeLive concept last year at its Wall Street location. Residents have access to a shared kitchen, fitness centers and lounges, in addition to the offices below.
Rather than spend the time waiting for a delayed subway line, millennials can roll of out bed, hop on an elevator and be at work in minutes.
The increased time spent in the neighborhood has fueled its development. While FiDi was once a 9-to-5 commercial district of Wall Street brokers and hedge fund managers, the presence of young workers after hours has led to a boom in retail, dining and entertainment.
Co-living has been part of a larger transformation in the outer boroughs, particularly Brooklyn. Common, a co-living concept that combines private rooms with shared spaces and community events, has locations in Brooklyn, Queens and Manhattan. Four of its locations are in Crown Heights, an up-and-coming Brooklyn neighborhood. Median rent across all properties rose to $2,940 in August, a sign of the area's growing popularity.
Crown Heights is the center point of a ring of burgeoning TAMI districts like DUMBO, Williamsburg and Gowanus. The easy access to growing innovation hubs will continue to attract young professionals to these areas, driving rent growth.
Common also offers co-living space directly within TAMI employment areas. Common Havemeyer in Williamsburg is blocks from Vice Media.
Co-living could also address the affordability crisis. Monthly rent for Common Herkimer in Crown Heights, which includes internet, laundry and household supplies, starts at $1,475 for a studio. The median price for a studio in Crown Heights, without utilities or other amenities, is $1,870. Affordability, particularly for existing residents, remains a concern.
Developers have also experimented with smaller private spaces as part of the solution.
Ollie, a New York-based co-living concept, worked with Monadnock Development on 32 market-rate micro studios in Kips Bay. The city waived a regulation prohibiting homes smaller than 400 SF to allow it to build the apartments, which range from 260 SF to 360 SF.
“There remains a sizable percentage of the workforce in question that cannot financially connect the dots,” Fitzsimmons said. “But the development of lower, reasonably priced multifamily housing, value-add investments focused on the sharing economy and through micro studios in these emerging neighborhoods as well as these co-living concepts, communal living might be the solution.”
To learn more about this Bisnow content partner, click here.