“We living” is one of the newest commercial real estate trends, and it’s continuing to grow. Co-living properties are popping up in big cities all over the country. The “we living” concept is distinct from traditional apartment living because it offers a dorm-style environment where tenants rent a private apartment but share common spaces like large living areas, patios and communal laundry. “We living” buildings also encourage residents to connect with one another by hosting community events, classes and social opportunities.
If you’re interested in buying commercial property to rent out, should you consider buying or building a co-living property? We’ll share some information about why “we living” properties are a smart investment, along with some risks to consider before you invest in your own co-living property.
Why Co-Living Properties Are A Good Idea
More Units Per Square Foot
Co-living spaces typically feature smaller units. Because of the focus on shared common areas, builders can design individual living rooms smaller in each unit. Additionally, the co-living concept appeals to many young, single professionals who will choose to rent a studio or one-bedroom apartment to minimize expenses. When units are smaller, developers can build more units into each co-living property, which will generate more income for the commercial real estate owner.
Fewer Appliances, Cheaper Upkeep
The “we living” concept involves providing more communal features and amenities, so fewer appliances are needed in each unit. A microwave, small cooktop and fridge may be more than enough for a resident who can also use the large, well-equipped communal kitchen down the hall. Additionally, a community laundry room prevents the need for a washer and dryer in each unit.
Co-Living As A Growing Commercial Real Estate Trend
The “we living” concept is new and novel, but we are seeing a growing urban trend that is continuing to spread. Owning a co-living property is being on the leading edge of the trend, and apartment buildings offering this living concept will be seen as unique and attractive, especially in unreached markets.
Risks of “We Living” Properties
More Bathrooms, More PlumbingThe flipside of increased earning potential in a building with many units is the additional cost of plumbing installation and maintenance. With more units, there will be more bathrooms to maintain, and potentially more maintenance technicians on staff to address issues promptly.
Steeper Upfront Costs
“We Living” is advertised as a move-in ready space for tenants, and units are expected to be fully furnished and tastefully decorated. Purchasing furniture and decor for every unit will start to add up. And with residents looking for more amenities, you’ll need to invest in hiring housekeeping staff, event planners and other customer service staff.
Higher Potential Vacancy Rate and Turnover
Forgoing the traditional year-long lease means accepting higher turnover and vacancy rates. However, the potential of renting vacant units by the night means bringing in income with a unit that would otherwise not make you any money.
Not Yet Popular in All Cities
The co-living trend is mainly an urban phenomenon at the moment, so introducing the concept in smaller cities is riskier. However, we see this trend continuing to grow throughout the coming years, and it may be wise to adopt the concept early, in order to enter potential markets without competition.
Should You Own a Co-Living Property?
If you’re interested in buying commercial property to rent out, it’s worth looking into the “we living” concept. As you consider the pros and cons of owning a co-living property, reach out to Jared Husmann with any questions you have. Call 515-334-4900 or contact us today to learn more about our commercial real estate opportunities.