It has not been an easy 2020 for co-living spaces, but multifamily residential management brand Common is proving to be an innovator that's ready to pull a quick pivot or two out of its hat.
While fear of "the spread" might have put a halt to many of the communal live-work-congregate concepts that came onto the market in 2018-2019, Common's newly announced workforce housing brand Noah seems like it should be fine in a post-COVID landscape. Granted, there will need to be design adjustments -- particularly in how Common typically approaches shared spaces and entry points -- but the product itself meets a need that should remain critical even in an economic downturn.
Addressing the workforce housing need
The workforce housing shortage has been a sticking point in major cities, upscale suburbs, and vacation centers alike for several years, and few multifamily players have found multifamily workforce residential development to be as sexy or compelling as luxury condos.
Yet even before COVID-19, demand was waning for luxury condos in many major cities -- or even if wasn't waning, communities like downtown LA, where proposed developments are abundant, were pushing back against an increase in market-rate housing that's unaffordable to people even if they make more than the area's median income.
Workforce housing, on the other hand, is a niche that 13.5 million people need, and not only does demand exceed supply, but logic dictates that cities need their workforces in order to thrive.
This last part holds true even in a post-COVID-19 economy, wherein "essential workers," from healthcare to delivery drivers to construction workers, will continue to be highly in demand in multiple markets -- while still fighting for the higher wages and benefits their industries often deny them. Meanwhile, nonessential workers will need to figure out how to downscale expenses while getting back on their feet. All these people will still need places to live, and essential workers often fall within the 60% to 120% of area median income earners that make up Noah's sweet spot.
A proven partner for management and marketing
Common, which has a track record of successfully managing small-footprint multifamily buildings priced in the more approachable range, is well-positioned as a partner for developers and investors that want to get into the small-footprint multifamily space.
As a management company, Common handles property management and marketing for buildings, not the actual development or construction. It's been successful in markets like Seattle and Los Angeles already, earning buzz for its modern design and tech-forward community management. The plan is to bring all of this over to Noah.
More about Noah
The product, summed up, is Class B and C rental apartments housed in aging buildings that have been refreshed and updated. Basic but functional and clean, with essential amenities and the convenient tech-enabled management features Common is known for, Noah units will be like a stripped-down version of Common's signature light and airy future-cities look.
Apartments managed under the Noah umbrella are positioned as "naturally occurring affordable housing" -- not the clunky, government-subsidized model, but a repurposed-for-the-times product that can be brought to market quickly in large and small cities. Tenants can set up maintenance service, renters' insurance, resident benefits, and various other lifestyle perks through Common, and basically everything is handled virtually -- even leasing, these days.
In fact, virtual leasing is something that Common says most competitors in workforce housing are not set up to do, and in situations where people may come somewhere just for work and not want to spend precious time seeking housing, virtual housing from a trusted brand priced way below the corporate housing norm is very appealing.
Looking to the future
While there's presently only one partner, outlier Realty Capital, the company expects more partners and to more than double the current number of 500 units by the end of 2020. The demand for luxury is going to continue plummeting, and short-term and medium-term workforce housing is in demand and will continue to be.
One can't assume that hotels or university dorms will house healthcare workers and first responders forever. And even in times when essential workers aren't traveling to answer the call of a pandemic-driven crisis, the housing situation itself is becoming a crisis for many, with Noah positioned as an effective form of treatment.