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Densifying with Residential? Consider Co-Living or Co-Housing

August 22, 2023

Growing interest in cooperative living, housing with shared spaces, is creating opportunities for urban-infill and mixed-use developers. Knit into the fabric of urban neighborhoods, co-housing buildings, some with townhomes, drive additional traffic to nearby stores, restaurants, service businesses and entertainment venues.

Urban Development Partners has completed three co-housing condominium projects since 2018 and has five more in various stages of planning and development in Washington, Oregon and California, said development manager Danny Milman, who runs the California office. “People who are focused on community tend to be particularly interested in the walkability of an urban connection,” Milman said. “Even if it is a small town, they want to be in the center of it. Some co-housing developments like our Berkeley, [California], project are also required to have their own retail spaces.”

Cathedral Park Cohousing in Portland, Oregon, has won its entitlements, and construction drawings are underway.

Urban Development’s co-housing projects range from 27 to 39 private units, each with its own kitchen. Residents run the community themselves and jointly own and share courtyards, gardens, community kitchens, offices, gyms, music rooms, workshops, libraries and the like. “In all of these cases, the co-housing groups were already formed and secured their land before we joined the project,” Milman noted, “so we are really working as a fee developer and development consultant for them. The future residents are bringing the money as members of the development LLC.”

With years of experience in urban-infill development, Urban Development secures entitlements and permits, guarantees construction loans, collaborates with architects and designers and shepherds these projects from design to finished construction. However, other developer-led approaches to co-housing also are viable, said Milman, who has worked on co-housing since completing a master’s thesis on the subject in 1998.

“Optioning or taking down a site is one of the most difficult things for a co-housing group to do,” she explained. A lot of folks just don’t know how to do that. I have been part of projects where we would option the site and form a co-housing group around the specific site as part of our due diligence. This was before the money went hard on the land.”

Defining Co-Housing and Co-Living

People interchange the terms “co-housing” and “co-living,” but they’re separate concepts, said Trish Becker, executive director of CohoUS, a national nonprofit that educates the public about co-housing and supports co-housing communities.

“Co-housing is private homes with ample common spaces. [They] could be common houses, guest suites, gardens, that sort of thing, but the important piece is that you do have your private home with your own bathrooms and kitchen,” Becker explained. “In co-living, often you are sharing bathrooms as well as kitchens.”

Self-management is another hallmark of co-housing. “The members make decisions together, based on consensus or other governance processes,” Becker explained. “With co-living, management could be by an external entity.”

As defined by CohoUS, co-housing also tends to require a significant amount of upfront investment from residents to hire designers, architects and attorneys; buy real estate; and pay for both common spaces and their own private homes. By contrast, co-living can range from affordable and barebones projects that offer the cheapest rent in the submarket to higher-end developments boasting thousands of square feet of shared amenity space, said Cushman & Wakefield managing director Susan Tjarksen, who leads a multifamily residential advisory group.

Over the years, co-living has evolved from the initial approach likened to “adult dorms.” Early on, Tjarksen explained, these projects were designed with eight or 16 bedrooms per shared living room, dining room and kitchen. “We’re not seeing that anymore,” she said. “The business model now is really three or four bedrooms, all with their own private bathrooms. It turns out that you’re happy to share a refrigerator but you don’t want to share your shower.”

Today’s co-living units tend to be located within residential or mixed-use buildings that also offer more expensive studios and one- and two-bedroom apartments, along with higher-end amenities. “If you cannot afford a studio, that does not mean you don’t want to be in the latest and greatest apartment building,” Tjarksen said.

Her group has provided financing and investment advisory services for co-living projects like:

  • The Post in Chicago: With 126 units and 440 beds, the 100% co-living development offers, among other amenities, a community kitchen and shared workspace. Weekly cleaning, internet and utilities are included, and the project is one block from the Chicago Transit Authority’s Red Line.
  • The Mid in Detroit: The $92 million project is comprised of 330 micro and one- and two-bedroom units. “Fifty percent of the units are considered co-living in that they are furnished and include utilities and cleaning in their rent,” Tjarksen said. “Further, there are big community spaces for these units,” including a co-working space, outdoor terrace and large spa and gym.
  • i5 Wynwood in Miami: Set for delivery this year, the 100% co-living building includes 63 units and 217 bedrooms. “Wynwood is the perfect submarket for co-living,” Tjarksen said. “It’s young professionals with seasonal jobs — think cruise ships and resorts — as well as people starting new jobs in Miami who need housing within two weeks’ time.”

Craving for Community

Due in part to greater awareness of the pain of social isolation thanks to pandemic lockdowns, interest in co-living and co-housing continues to grow, observers say. According to Becker, about 200 co-housing communities exist in the U.S. and about 200 more are in planning and development.

She added that an advisory report published this year by U.S. Surgeon General Dr. Vivek Murthy called Our Epidemic of Loneliness and Isolation has focused public attention to the need for social connection and community. Already, younger people are eager to explore alternative-living models, even if they have never heard of co-housing per se. “They describe just wanting to live in a place where they’re next door to friends and can do things like support each other with childcare, share meals and just be together,” Becker explained. “They’re realizing that they need one another.”

Older residents also have embraced cooperative living. Urban Development’s first co-housing project, PDX Commons in Portland’s Sunnyside, is a cooperative community started by a group of seniors. Completed in 2018, the four-story building offers 27 private, single-level residences and more than 5,000 square feet of shared space. Units are arrayed around a common courtyard to maximize natural ventilation and solar exposure. In a video about the project, members describe joining in food drives, volunteering in schools, throwing dance parties, jointly planning and cooking several meals each week and walking to local grocery stores, coffee shops, boutiques, parks and food trucks. “I am firmly convinced that I will live longer and happier as a result of being here,” said one resident.

Another example is California’s 19-condo Mountain View Cohousing Community. Many of its members, who share 6,000 square feet of indoor and outdoor amenities, are seniors.

Residents drove the development of California’s Mountain View Cohousing Community, which offers more than 6,000 square feet of indoor and outdoor amenities.

Higher-end co-living rental developments, as opposed to resident-owned co-housing projects, also foster community. This is especially true if residents can use apps to set up events and invite their neighbors, Tjarksen said. “The same app that you use to pay your rent or file maintenance requests will often have a digital bulletin board. It could be: ‘Hey, we’re making mushroom ravioli on Tuesday night. Come join us.’ Or: ‘I’m going apple picking on Saturday. Does anybody want to go?’”

Co-living developments performed better than expected during the pandemic, Tjarksen added. “We used to say there are three Cs to co-living: cost; convenience, meaning it has to be located near shops and public transportation; and community. You come for the cost. You stay for the convenience and the community.”

Greater Role in Mixed-Use?

If ending isolation becomes an even bigger societal priority, could developers benefit by incorporating more co-living and co-housing into mixed-use projects? It could work, sources said, but the community dynamics and the financing could be challenging.

Co-housing groups, for example, usually play a central role in planning and design, typically the role of the developer on conventional mixed-use projects. “Some co-housers might feel that you could not have a developer build co-housing and then have the residents enter later,” Becker explained. “I am of two minds on this. On the one hand, we can and need to make this work in all sorts of different formats. On the other, there is something to be said for shared financial ownership and the emotional labor involved in co-housing rather than the feeling of: ‘The developer manages this and maintains it.’”

But, Becker said, a mixed-use developer could build a co-housing component based on communal design principles with shared, members-only amenities and guarantees of self-management for residents. “Co-housing is not a legal model so much as a social one,” Becker said. “It’s about the intention of the neighbors who come to regular meetings, have weekly meals together and join committees … and it’s important for the ethos of co-housing to have that specific space for the functioning of the community.”

As Milman sees it, co-housing could work as part of master-planned redevelopments of large malls or other sites in first-ring suburbs. She pointed to the co-housing component of Highlands’ Garden Village, a 27-acre, mixed-use redevelopment of Denver’s former Elitch Gardens amusement park. “The co-housing component ended up being a nice anchor for the redevelopment,” Milman said. “That early buy-in by future residents provided guaranteed sales for a portion of the redevelopment, making it easier to court retail and other users to the adjacent properties.”

“The co-housing component ended up being a nice anchor for the redevelopment. That early buy-in by future residents provided guaranteed sales for a portion of the redevelopment, making it easier to court retail and other users to the adjacent properties.”

Co-housing also can function as a transitional step to greater density. “In places where you are trying to move from single-family to something that is more urban or retail or multifamily, co-housing can be a good in-between form of development,” Milman explained. “You’ve got people who already know each other. As a result, they’re willing to move into a new area or redevelopment where others might not be ready to do so.”

In the case of co-living rental units, the mixed-use redevelopment would need to be located close to infrastructure like public transit and an airport, Tjarksen said. More than likely, co-living would just be a component of the residential portion, as it can be hard to scale on its own. “These big institutions cannot go mouse hunting with an elephant gun,” Tjarksen said.

And because just a subset of the population is interested in sharing spaces and collaborating with neighbors, financing could be a challenge. “Financing is driven by predictability of profit,” Tjarksen said. “How many people are going to be in it? How much can they afford to pay? What happens if somebody doesn’t get along? These kinds of questions add risk and can make it harder to underwrite the pro forma.”

But as research shows that cooperative living can improve health and well-being, stronger demand could lead to new models, including larger-scale opportunities for mixed-use developers. Becker, for one, is moving forward with plans for a “micro village” on an acre outside Denver. “It has two existing homes, and we’re working on rezoning it so that we can build an additional three,” she said. “It’s the same principles of co-housing but just on a smaller scale.”

The CohoUS executive director herself joined her first co-housing community a few years ago, after feeling the effects of social isolation. “I found myself lonely in the suburbs with a baby on the way,” she recounted. “I just thought: ‘This is not the life that we want to live.’”

Urban Development Partners’ Adams Creek co-housing project is under construction in Hood River, Oregon. Residents of its 25 units share ownership and use of a large common house overlooking the Columbia River Gorge.

By Joel Groover

Contributor, Commerce + Communities Today

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