Inside Communal Living: Shared Living Spaces Explode in Popularity

The urban housing landscape is transforming, fueled by the growing popularity of communal living, or "co-living."

Affordable rents become even more relevant when considering the nationwide surge in rental costs. CoreLogic data from last month shows a 30 percent increase in single-family rents across the country since February 2020. The spike in rents is part of a broader trend where renters, especially in urban centers like Chicago, are allocating a substantial portion of their income towards housing, with the average American renter household spending about 40 percent of its income on housing costs, according to CoreLogic's data.

Said to be a modern housing solution by those who invest in the growing sector, co-living blends private and shared spaces, with its value proposition being affordability, flexibility, and community.

A Modern Solution to Urban Housing Challenges?

Like having a traditional roommate with a twist, co-living offers residents a private bedroom within an already fully furnished home, while sharing common areas like kitchens and living rooms with others assigned to apartments.

For individuals like Mark Ayers who struggled financially due to rent being up three-fold since the onset of the pandemic, co-living was an attractive option. "[Living there] was about being part of a community while I saved up for a down payment on a house," Ayers told Newsweek.

Complementing Ayers' perspective on the cost-effectiveness of co-living, rental data offers a broader view of the financial landscape in major U.S. cities. For example, at 'The 808 Cleveland' high-rise building in downtown Chicago, managed by co-living residential company Common, a fully-furnished room in a four-bedroom apartment starts at $1,332 for a six-month lease.

Comparatively, an unfurnished private studio in the same building starts at $1,994, and a more lavish 3-bedroom, 3-bath Penthouse begins at $5,730.

Similarly, in New York City's Upper Manhattan, where studio rents typically start at $2,495, Common's 'The Reserve' in Harlem offers fully furnished rooms starting at $1,584.

Common says this is where co-living emerges as both a socially beneficial option, and as a financially pragmatic one.

The Rise of Co-living in the U.S.

The concept of co-living isn't a new phenomenon; however, it could be a solution for residents in those big cities with high rent, according to YouTuber and private equity investor Codie Sanchez, who said on X (formerly Twitter) that companies involved in co-living are aiming to offer affordability and flexibility.

"There are 20% more co-living rooms in the US now than in 2020," Sanchez said Tuesday, "and the global market is expected to grow 16% per year, hitting $9B by 2025."

Sanchez did not immediately respond to Newsweek's request for comment.

Companies like Common, June Homes, Urby, and Outpost Club are working to draw in young professionals, students, workers, and digital nomads by offering modern amenities, affordable rent, community, and new technology.

Why Co-living?

According to Ayers, who lived in a building managed by Common, co-living provides a solution to more than just "sky-high" rents. While lower rent attracts residents, the included amenities and community keep them around. "Living in a co-living space was more than just a financial decision for me," Ayers said to Newsweek, noting that he's made "life-long" friends through the community.

Beyond financial benefits, Common, which manages a host of co-living apartment buildings across 14 cities in the U.S., said in a blog post that the sense of community found in its buildings is often lost in urban environments, and it caters to a diverse group offering them a built-in social network.

The Business Perspective

From an investment standpoint, co-living is a profitable venture, according to Sanchez, who noted that Italy-based co-living company Casa Mia has 90 percent occupancy rates with $7 million in annualized revenue.

And, the movement is not just confined to the U.S. and Italy—it's becoming a trend in global real estate, evident in the U.K., and Asia.

In the U.K., companies like Gravity Co-Living are pioneering the co-living subscription model, offering access to furnished spaces, well-being events, and community discounts. In Germany, co-living businesses like Habyt have seen rapid growth, expanding to multiple cities in Spain. There are also popular co-living companies based in Guatemala, Denmark, and Morocco.

Challenges and Nuances of Co-living

While the growing real estate sector offers an innovative solution to urban housing challenges, it's not without complexities. Unlike traditional apartments, co-living spaces often require navigating communal living dynamics.

Common said that while the company is designed to reduce the typical arguments and tensions that come with roommate living, like splitting the bills and buying essentials, the company may be able to transfer a tenant to another unit or home if significant conflicts arise.

Residents in areas where co-living buildings are located have opinions, too.

"The co-living phenomenon is something I am skeptical about," Metropolitan Tenant Organization community organizer Kristen Long told Newsweek, adding that co-living arrangements are like "college dorms for people in their 30's."