Real Estate Business Case For Co-Living - Britt Zaffir

Summary

Britt Saphir from Common presents an innovative approach to residential living, catering to the 'roommate generation' by offering modern, flexible housing solutions. Common provides affordable, community-driven living spaces with fully furnished units, weekly cleaning, and seamless room transfers across properties. With strong demand, a retention rate of 70%, and significant cost savings for residents, Common is reshaping urban housing. They focus on optimizing spaces for roommates, creating a sense of home while addressing the shift towards more flexible living arrangements, especially for young professionals in major U.S. cities.

Takeaways

• 😀 Common operates as a residential operator focusing on modern living, managing both traditional and co-living units.
• 🏙️ The way people are living has shifted, with cities and property managers struggling to keep up with societal changes, especially the demand for affordable housing.
• 💍 People are delaying marriage, with the average age of marriage rising nearly a decade, which has contributed to the need for more flexible living solutions.
• 👫 Roommate living is more common than ever, with 78 million Americans living with someone they aren't married to or related to.
• 💵 Real wages have stagnated, and rents have risen, creating a widening gap between what people can afford and what they actually pay for housing.
• 🏠 Common is addressing the needs of the 'roommate generation' by offering co-living solutions that prioritize convenience, community, and flexibility.
• 🛋️ Common enhances convenience by providing fully furnished units, weekly cleaning services, and covering utilities and shared goods.
• 🤝 Community is a key focus for Common, offering shared spaces where organic communities can form and thrive.
• 🔄 Flexibility is a hallmark of Common's model, allowing members to easily transfer between units and properties within Common's portfolio.
• 💡 Common offers a more affordable alternative to traditional apartments, with members saving 20-30% a month compared to living in their own studio units.
• 📈 Common's approach to real estate includes efficient use of space, resulting in higher yields for developers, while offering high-quality, attractive living spaces for members.
• 🌍 Common has grown rapidly, expanding from a single 19-bedroom property in Brooklyn to operating in six cities, with plans to continue expanding.
• 🛠️ Common's Newark project is notable for its creative adaptive reuse of an old hospital, combining affordability with innovative real estate financing methods like opportunity zone incentives and tax credits.

Q & A

What is Common, and what type of real estate does it operate?

Common is a residential operator that focuses on modern living spaces, primarily managing co-living and traditional units. They design and operate housing solutions for young professionals, aiming to make living with roommates more convenient, community-driven, and flexible.

What societal shifts have impacted the housing market, according to the speaker?

The speaker highlights several shifts: people are delaying marriage, living with roommates for longer periods, real wages have stagnated or declined, and more cities are seeing higher proportions of single individuals. These shifts have led to inadequate or unaffordable housing in many cities, particularly for young professionals.

Why is the traditional family structure no longer the dominant living arrangement?

The traditional two-parent, child, and dog nuclear family is becoming less common, as societal trends show a delay in marriage and more people living with roommates, even into their later years.

How does Common address the pain points of living with roommates?

Common addresses these pain points by offering fully furnished units, weekly cleaning services, and covering all bills, making the process of living with roommates more convenient and less stressful.

What key aspects does Common focus on to create a better co-living experience?

Common focuses on three main aspects: convenience (fully furnished homes, bill payment, and cleaning), community (programming and designing spaces that foster organic social connections), and flexibility (allowing members to transfer between units in the Common portfolio with ease).

How does Common differentiate its homes from traditional rental properties?

Common homes are designed to offer an elevated living experience, featuring beautiful, thoughtfully designed spaces with lots of natural light and storage. The homes are intended to feel like 'homes' rather than just rental properties, with minimal yet functional bedroom designs that allow for personalization.

What is the typical member profile for Common, and how do they benefit financially?

Common's typical members are young professionals who benefit from affordable living options. By choosing to live in a Common home instead of a traditional studio, members can save 20 to 30 percent on rent while enjoying fully furnished spaces with utilities, Wi-Fi, and shared amenities included.

How does Common's business model compare to traditional real estate developments?

Common's model is more efficient than traditional real estate, as their shared spaces allow for higher yields with less square footage. For instance, a five-bedroom apartment in Common may only be 1,370 square feet, compared to 3,000 square feet in a traditional development, leading to higher annual yield for developers.

What is the significance of Common's three-year growth?

In just three years, Common has grown rapidly, expanding from a single 19-bedroom brownstone in Brooklyn to a portfolio of homes across six U.S. cities with a less than 3% vacancy rate. This growth signifies strong demand for co-living solutions, with a 70% renewal rate among members.

How does Common plan to expand in the coming years?

Common is actively expanding into more cities, with plans to expand its portfolio further in New York and other regions. For example, they are working on a project in Newark, New Jersey, with a significantly lower price point compared to typical urban rentals, while also utilizing innovative financing models like opportunity zones and tax credits.