Co-Living Goes Affordable

New York offers city financing to encourage developers to build co-living projects that are below market rate.

This story by Stefanos Chen appeared in the New York Times. Stefanos Chen is a real estate reporter, based in New York. 

The co-living trend — in which renters lease sleeping quarters that are often tiny, and share common living space with roommates — now has the city’s official backing.

On Thursday, the New York City Department of Housing Preservation and Development is expected to announce a pilot program that will allow developers to vie for public financing to create a more affordable version of the dorm-style living arrangement that has emerged in some of the city’s priciest neighborhoods. Much of what already exists is at or above market rate, with some buildings offering additional amenities to residents.

The city’s pilot, called ShareNYC, will seek proposals for private development sites that favor mostly income-restricted units, including those for very low-income renters. The units will vary in design, but will likely run between 150 and 400 square feet per bedroom, may or may not have private bathrooms, and will include a common kitchen and living space that is shared with other roommates, according to a briefing on the program and an agency official. A mix of conventional and market-rate units will also be considered.

Versions of this kind of housing have already sprung up around the city, but restrictions on the maximum number of unrelated roommates (up to three), and constraints on most ground-up construction in this category, sometimes called “single-room occupancy,” or S.R.O., have limited what developers can build.

Some of these existing co-living arrangements may be less expensive to rent than larger, conventional units, but still veer toward luxury prices. With this pilot, city officials are hoping to create new models of shared housing that will bring down construction costs and incentivize the creation of more affordable units.

“It’s really a decision that reflects what we see in the world — a shortage of small apartments,” said Maria Torres-Springer, the department’s commissioner, who noted that about two-thirds of households in the city consist of just one or two people, yet less than half of available housing caters to them.

Even the smallest apartments are often out of reach for many renters. More than 436,000 single adults living in New York in 2015 were rent-burdened, meaning they spent more than 30 percent of their income on rent, according to an analysis by New York University’s Furman Center. Among them, 250,000 spent more than half of their income on rent.

Building smaller units, with higher density, could be one way to create more affordable units, said Jessica Yager, the executive director at the Furman Center.

“We show that as the units get smaller, the amount of money needed to support the development is less,” she said.

The idea is far from new. For many struggling New Yorkers, co-living is just another name for informal room-sharing, said Sarah Watson, the deputy director of the Citizens Housing and Planning Council, a nonprofit research organization.

“We’re moving toward nontraditional households, and our housing stock hasn’t quite caught up yet,” she said.

According to the group’s 2017 census analysis, almost a quarter of New York adults were unmarried, considered low-income (making $58,481 a year or less), and living in a shared apartment with family or roommates. The data also dispel the stereotype that only the very young and relatively affluent seek these arrangements: Among that group, the median income was $22,000 and the median age was 36, she said.

Part of what the city is seeking in the proposals is answers to questions that anyone who has roomed with strangers might ask: Who cleans the living room? Who pays for damages to the common area? Who buys the toilet paper?

All entrants must address how their project will manage tenant relations, and the city will likely look to models established by private companies who are already in this space.

“We mitigate the risk that someone is a freeloader,” said Brad Hargreaves, the founder chief executive of Common, a co-living management company with 319 beds in New York City and another 400 in the works. His company not only furnishes the bedrooms and shared spaces of the apartments, but also pays for routine toiletries and cleaning services, which he said could otherwise become points of conflict in the home.

Residents pay for the privilege. Prices for a co-living unit at the Baltic, a project in Brooklyn’s Boerum Hill neighborhood with both co-living and traditional apartments, range from $1,950 to $2,100 a month. Considering these are furnished units with amenities, that is somewhat less expensive than conventional studios in the area, which asked for a median $2,200 a month last quarter, according to StreetEasy. Mr. Hargreaves said it was more typical for their co-living units to lease at about 20 percent less than conventional studios.

The pilot program could attract some new players. The Collective, a London company that has developed co-living units overseas, recently purchased a 350,000-square-foot vacant site at 555 Broadway, in southeast Williamsburg, where it plans to build more than 500 co-living units.

At that project, 30 percent of the units will be rented below market rate, said James Penfold, the company’s planning and zoning director, adding that the market-rate units will still be 20 percent less expensive than conventional rentals nearby.

The company has not yet reviewed the city’s co-living program, but Mr. Penfold said they were keen to look into it. “This is just the tip of the iceberg,” he said. “We’re actively looking at more projects.”

Stefanos Chen is a real estate reporter, based in New York. He joined The Times in 2017 after five years with The Wall Street Journal, where he was a reporter and multimedia producer. @stefanoschen

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