Co-Living Companies Taking Some More Heat as They Expand Rapidly in New York City Post-Pandemic
December 14, 2022
I have been writing about co-living in these pages before almost anyone had heard of it. One of my areas of core competency is co-living consulting.
Co-living is an arrangement by which a landlord rents an apartment to a group of tenants, for at least thirty days, where the tenants occupy and share the apartment as roommates, an arrangement which the landlord consents to and facilitates as an active participant. The tenants have flexible terms, which are often short (but at least 30 days), and are allowed to vacate the apartment early without liability for the full term of the lease. If a roommate is lost, the landlord assists the remaining tenants with getting a qualified new roommate to take the lost roommate’s place and gives the remaining tenants rent relief while doing so. The landlord frequently provides the tenants with other advantages and amenities, including but not limited to furnishings and personal property, services, and thematic programing. Co-living places a big emphasis on the creation of a community within the apartment. The price per square foot for the apartment is often higher than it would be if the same apartment was not rented for co-living, although the net price to each tenant is often lower than if they were in a typical apartment-share situation. The advantages of co-living for the tenant are affordability, flexibility, convenience, limited liability for bad roommates, and community. The advantage of co-living to a landlord is a higher price per square foot and greater control of the occupants of an apartment.
Co-living is expanding rapidly in New York City post-Pandemic. My belief is that, when done legally and correctly, co-living can play a role in abating the housing crisis we are experiencing here in New York City. Co-living is nothing more than shifting risk and burden to the landlord. Classically, small landlords want to do less, not more. But co-living landlords (the good ones) are doing more not less! Because it makes economic sense. When the housing stock you are offering is code-compliant and nice, when you respond to your tenants like customers, when technology makes the rental process easier, when the landlord finds the new roommates, when tenants are allowed to leave early without penalty, when apartments are semi-furnished, when tenants can switch easily from one neighborhood to another if they want to, then tenants pay the rent. There is little to no interruption in a building’s income stream. Co-living, when done legally and correctly, had great advantages for landlords and tenants.
The problem comes when bad actors enter the scene and call their illegal room-renting “co-living”. I was quoted (favorably thank G-d!) in two recent news stories on this topic. I was quoted in a in a Gothamist piece entitled “NY’s attorney general is eyeing co-living companies as residents complain over ‘scam’ housing” published on September 14, 2022. I was quoted in a Bloomberg piece entitled “Co-Housing Startups Fly in the Face of Old-School NYC Housing Law” published on December 6, 2022.