Should We Care That Co-Living is Dead in the U.S.?

Small scale co-living might be the future of this housing type

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WeLive, the co-living concept from WeWork

I started writing my book Brave New Home six years ago at a time when co-living was the hot new idea in housing. 

Co-living seemed to be a perfect fit for the era of extremely expensive cities, socially isolated young adults, and the frantic pace of contemporary society. Historically many young people came to cities not to stay at home but to work at an office or be out on the town. They didn’t care if their apartments were small or crowded with roommates, so long as they were well located. Co-living not only offered well located apartments but solved for the friction-filled experience of renting: apartments came furnished, roommates were already picked out, programming like group dinners and yoga classes engaged people in socializing, leases could be as short as a few weeks. 

Real estate developers were attracted to co-living because they found a business model in co-living’s added value and could also help to address the need for more housing in cities. Co-living companies raised hundreds of millions of dollars in investment in the late 2010s as the concept showed promise. 

One of the reasons I found co-living so compelling is that it destigmatized communal ways of living. As co-living’s three- , four- and five-bedroom apartments became more accepted, I found local governments reconsidering their outdated building codes. As co-living resembled high end single-room occupancy (SRO) buildings, it seemed there was more openness from residents and policymakers to enable deeply affordable, traditional SRO buildings. Cities like New York, New Orleans, and Atlanta all found ways to encourage co-living pilots for low-income residents

ShareNYC, New York’s low-income housing co-living pilot

By the time my book was going to press in late March 2020, there were several companies – Ollie, Starcity, The Collective, WeLive, Common, Quarters, and others – whose co-living units under management collectively numbered in the tens of thousands. By 2022, a New York Times article noted that 72,000 co-living units were under management. Were these truly co-living apartments or just multifamily units? Not sure. But now in mid-2024, none of those co-living companies exists and my chapter on co-living reads like history. How did this happen?

Almost as soon as co-living expanded into the mainstream it started to falter. WeLive dissolved as WeWork imploded in 2020, then one by one all the companies mentioned above either faltered or were subsumed by Common. Along the way, I noticed Common shuttered its promising family-oriented brand, Kin, and never seemed to follow through on an Amazon-HQ2-like call for proposals of a remote work community, signs that suggested to me that the company was focusing more on traditional properties than on co-living. Then Common, really the last major co-living company standing, first merged with the European company, Habyt, and then just a few weeks ago filed for bankruptcy. 

How did this seemingly popular housing type massively lose appeal and market share? While independent co-living continues – as it always has and always will – does the end of mainstream co-living in the U.S. portend a retrenchment in innovative, scalable solutions to addressing the demographic shifts of our day? What will replace the co-living model – just more regular multifamily housing? Should we care if that’s the case? 

 

The pandemic should have been a time for co-living to flourish. People created small “pods” or groups of people they felt comfortable socializing within. A co-living community would seem to be a cozy way to weather that isolating time amidst a group of friends. And yet, Covid precipitated a significant decline in interest in co-living.

While the retrenchment would be short lived, when demand resumed, interest rates soared making all property development very difficult. I have to imagine that specialized housing like co-living – which was traditionally built in expensive cities near downtown cores and depended on young people who didn’t spend their days working from home – was even less investable. I also have to imagine that Airbnb’s post-pandemic focus on furnished short-term apartments also ate into co-living market share.

Perhaps because property development was difficult, providers moved away from owning and managing and branding real estate to serving as a tech intermediary for shared living. PadSplit calls itself a co-living operator with 13,000 units under management according to its CEO. But it’s really like a specialized version of Craigslist. 

All of this suggests that the communities that were emerging five years ago – which really did rethink what multifamily properties could be – are being replaced by traditional rentals. 

Co-living isn’t actually dead, but the model that these big developers created is. There is a vibrant and dedicated co-living world out there – it’s just not meant for private equity. And that is great in some ways, but frustrating in others. It means that many interesting aspects of co-living — like apartments with four bedrooms or communal activities — are unlikely to scale in the U.S.

An office floorplan, before and after conversion to co-living

The timing of this is also a shame. There is a glut of downtown office buildings that need to be reimagined and co-living is well-suited to the big floorplates of office buildings. But it’s unlikely that the co-living ecosystem can take advantage of this moment.

Perhaps building code reform will advance without co-living as a catalyst. Single-stair building code reform will enable the production of more multi-bedroom rental apartments and SROs will emerge as a result of the need for deeply affordable, non-subsidized housing, rather than co-living.