Co-living is one of the newest commercial real estate trends that appeals to millennials because it fits in with the millennial lifestyle values of travel, adventure, minimalism and connection. “We living” is gaining popularity in larger cities like New York, Los Angeles and Washington D.C., but could a co-living property find success in the midwest? If you’re interested in buying commercial property to rent out in the midwest, read more to find out if a co-living property could be a good investment for you.
“We Living” and Midwestern Markets
If you perform a location search on coliving.com, a co-living search platform, you’ll see North America’s co-living offerings limited to a handful of large cities on the east and west coasts. It makes sense that this concept is thriving in places with high population density, astronomical rent costs and a high percentage of young professionals.
Commercial real estate trends often start in bigger cities and funnel down into smaller markets later. We think it’s time to start thinking about bringing “we living” to the Midwest. In smaller Midwestern cities, the co-living concept is untested and riskier, but we think it could be successful if executed strategically.
Co-Living Risks in Midwestern Markets
- People who have grown up in the midwest enjoy their own space. Even urban areas in the midwest are less dense than big cities. The communal elements of co-living properties may not appeal to people with midwestern mindsets.
- Rent is already inexpensive in smaller midwestern cities, so affordable co-living options might not stand out as much as they do in places like NYC and LA.
Co-Living Opportunities in Midwestern Markets
- Recent surveys have revealed that millennials are flocking to cities like Kansas City, Denver, Minneapolis and Des Moines. The “we living” concept appeals to millennials, so buying commercial property to rent out as co-living space could be a very wise and lucrative investment in these markets.
- Although rents are generally more affordable in smaller midwestern cities, downtown studio apartments and one-bedroom units are still often too expensive for the average single young professional. A co-living property would offer an affordable alternative, and units would fill quickly due to high demand for low-cost downtown housing.
- Oftentimes, there is a large population of recent graduates and young professionals living in college towns like Iowa City, Iowa, and Lincoln, Nebraska. Opening a smaller-scale co-living property in a mid-sized city would be a great way to gauge interest for similar-sized markets.
- Also suggested is to target areas with employers who hire millennials. For example, Epic Systems in Madison, Wisconsin, employs 10,000 people, mostly millennials. Madison would offer a great place to test a midwestern co-living property.
Contact Commercial Real Estate Experts
Daring investors might be able to achieve excellent ROI by taking advantage of new commercial real estate trends like “we living.” If you’d like to purchase or learn more about commercial real estate with the aim of developing a multifamily apartment complex or co-living property, contact Jared Husmann today at 515-334-4900, or contact us.