If you have bad memories of dorm life, you’re not alone. Dorms are notoriously dirty, chaotic, and stressful environments where all-night noise, bedbugs, and bad food prevail. Over the past five years, however, dorms have started to attract an older and more discerning crowd. In fact, in many of the nation’s most active real estate markets, young working adults are increasingly choosing to live in off-campus dorms and often paying a considerable price for the privilege.
While the idea of working adults voluntarily choosing to live in dorms may sound surprisingly, it is important to bear in mind that adult dorms offer amenities unlikely to be found on any campus. From stylish furniture and kitchens equipped with high-end appliances and wine coolers to roof-top gardens and yoga rooms, dorm life is growing up.
These adult dorms also fill a notable gap in the housing market by meeting the needs and discerning tastes of young urban professionals who are searching for homes with style, amenities, and a built-in sense of community at a monthly cost that still makes it possible to pay back student loans and save for the future.
Dorms by Any Other Name
If an online search for “adult dorm” doesn’t yield many hits, it is likely because these new dorms have been intentionally and wisely marketed by any other name from “hacker house” to “co-living space.” In essence, however, these residences do share the basic structure of their on-campus counterparts. T their core, the concept is identical—take a bunch of complete strangers, vet them to weed out any obvious conflicts (e.g., separate the smokers from the nonsmokers), and leave them to share a bathroom or two, kitchen facilities, and common rooms.
While adult dorms don’t come with a “don” (on campus, this is usually a rule-abiding senior who gets free rent in exchange for policing other people’s behaviors), today’s adult dorms or co-living spaces generally do have a live-in house manager. In some co-living spaces, house managers are not only there to call the plumber when a toilet overflows but also, much like an on-campus don, organize social events and ensure new residents are properly integrated into the community.
Affordability, Amenities, and Community
It’s no secret that in New York City and San Francisco, living alone in a desirable neighborhood that is still commutable is a privilege that few young people can afford. For most young professionals, especially those who are paying off student debts, living alone typically means spending well over 50 percent of one’s monthly take-home pay on rent. In the past, the only alternative was to look for a roommate—something that often meant searching through the dubious roommate wanted listings on Craigslist. As adult dorms become increasingly popular, finding roommates and apartments just got a lot easier.
Take, for example, New York City’s ALTA LIC, which is currently the largest co-living space in the United States. Managed by Ollie, one of the many co-living startups changing how young professionals live, ALTA LIC includes 13 floors of co-living spaces in a larger mixed-use building located in Long Island City. Depending on the unit and specific arrangement, a co-living space at ALTA LIC cost between $1,300 and $2,300 per month. In addition to helping one find a roommate—for this task, Ollie relies on Bedvetter, a roommate matching service—residents get much more than a bedroom. The monthly rent also includes access to a gym with pool, social club and community events, housekeeping, linen and towel service, kitchen wares, transformable furniture (e.g., a wall bed that doubles as a sofa), premium television with over 350 channels, and wi-fi. This means that there's no need to waste one’s salary on quotidian household items like toilet bowl brushes and spatulas nor on typical new home start-up costs such as cable and Internet activation fees. A hybrid inspired by campus residences, boutique hotels, and full-service co-ops, these adult dorms essentially come with everything one needs to achieve a reasonably dignified adult lifestyle on a restricted budget.
Ollie, which was established in 2012 and has raised $15 million in two rounds of funding, is just one of the many co-living startups currently operating in the United States. Starcity, one of the earliest players in the co-living space, operates exclusively in San Francisco. The co-working company, WeWork, recently launched WeLive with bases in New York City and D.C. but reportedly has no plans to expand further at this time. Common, which has raised $60 million in funding since it launched back in 2015, is arguably the most dominate player on the market with co-living spaces in New York City, D.C., Seattle, San Francisco, Chicago, and Pittsburgh. Finally, in addition to these major players, there are several newer and smaller startups vying for a piece of the co-living market, including HubHaus, Bedly, and Roam. Outside the United States, co-living is also beginning to gain ground, especially in notoriously pricey real estate markets such as London and Paris.
Investors and Traditional Real Estate Companies Are Buying In
Just a few year ago, co-living was new enough to feel like just another startup world trend, but as co-living gains traction, startup founders aren’t the only people seriously exploring the potential of the co-living market. Investors have poured over $78 million into co-living startups over the past year alone, and increasingly, co-living is also attracting the attention of established real estate companies.
In 2017, Durst, a New York City commercial and residential real estate company that has been in operation for more than a century, reportedly set aside a limited number of units for potential co-living rentals at Frank 57 West. Another established company, PMG has also been making moves to get into the co-living market. Under a new division known as X Social Communities, they have already set up co-living space sin Chicago, Denver and Miami, which notably are all cities that have not yet be dominated by more established co-living startups. But does the co-living concept have the legs to make it a good long-term investment?
Adult dorms or co-living may not offer a long-term housing solution for residents. Let’s face it, at some point, everyone wants to be able to go to the bathroom in the middle of the night without running into virtual strangers. As a concept, however, it seems likely that co-living is here to stay. To appreciate why, one need only consider co-living’s history, which didn’t just begin a few years ago with the rise of adult dorms.
Until the 1960s, unmarried urbanites typically lived in rooming houses, which generally offered a private bedroom, shared kitchen facilities (often with one or more meals per day), and access to common spaces and did so at a set weekly or monthly rate. In the 1960s, a series of social and economic shifts led to the demise of the boarding house. Given the availability of inexpensive housing, especially in the 1970s, few young people were mourning the boarding house’s loss at the time. What happened after the boarding house’s demise, however, is something that continues to impact young urbanites to this day. Between 1970 and 2010, rents in American cities soared and did so at a much faster pace than average incomes.
Combined with another trend—the migration of young people from rural communities and smaller cities to major urban centers—by the 2000s, cities like New York and San Francisco were facing a growing housing crisis and one that has arguably disproportionately impacted the young. Adult dorms are unlikely to fix the current housing crisis in these cities but their appearance does fill a housing gap that was left when earlier co-living spaces—namely boarding houses—all but disappeared in the 1960s.
While it is unclear whether adult dorms will prove to be a strategic investment in the long-term, they certainly appear to offer strong potential for growth. After all, faced with the prospect of paying close to $2,000 monthly for a dingy studio with no amenities at the end of the subway line or paying much less for a room in a well-appointed and amenities-rich co-living space in a desirable neighborhood, the choice seems obvious.
Lead image courtesy of Macro Sea