Coliving arrangements that combine private units with shared spaces could make it easier to redevelop underused office properties and provide lower rents to address a U.S. housing shortage, according to a new report.
While a number of large downtown office buildings aren’t well-suited to be transformed economically into conventional apartments because of poorly located plumbing for bathrooms and kitchens, microunits with bathrooms smaller than the average studio apartment along former office perimeters with centrally located kitchens, laundry and other common areas could be a lower-cost approach, according to a Pew Charitable Trusts analysis.
The small spaces might not be appropriate for families with children, but could lure students and recent college graduates or retirees, said Alex Horowitz, Pew’s housing policy director, in an interview. Individual floors could be supportive housing for formerly homeless people or leased by hospitals for temporary staff residences, and working with architectural firm Gensler and Turner Construction, Pew found rents could be half the median in some cities.
Some big cities from San Francisco to New York have been grappling with high office vacancy rates in their central business districts after businesses cut costs and remote work took hold in the pandemic. Converting some of these buildings to residential use could bolster property tax revenue and add activity to downtowns, according to the report. It could also help with a U.S. housing shortfall estimated at between 1.5 million and 5.5 million housing units.
From colonial times until the 1970s, U.S. cities had housing resembling coliving, according to a Niskanen Center think tank's 2022 report. But single-room units largely disappeared as cities revised land use and construction codes. Some developers built coliving spaces of late, such as the Highline at Union Market in Washington, D.C. Real estate firm Cushman & Wakefield estimated the number of U.S. coliving units at 8,000 in 2020, up from less than 100 six years earlier.
“These are a lot nicer than those older buildings,” Horowitz said of the coliving spaces Pew envisions. “They’re up to code, they have amenities, they have 24-hour security and professional cleaning and maintenance.”
There are downsides: Investors in these buildings would have to settle for a lower return than they might normally get through conversions to traditional apartments, and some public subsidies could be needed for people with lower incomes to live there, according to Pew’s report. A number of office buildings that have been converted to conventional residential use to date have had high development costs per unit and, therefore, high rents.
Figuring out how to properly manage a coliving property is also a challenge, Pew noted in the report that looks at how office conversions to coliving housing might play out in Denver, Minneapolis and Seattle, cities that legalized coliving in their downtown markets over the past two years. And while some cities have legalized coliving, they may continue to make it difficult through minimum parking requirements and sizes or caps on the number of units in a building.
Even so, some advocates, such as New York City’s 5BORO Institute, propose taking the coliving idea in former office buildings a step further, by allowing housing units with bedrooms that have access to natural light but not necessarily exterior windows.
Coliving in apartments makes sense as an option today given the small size of the typical U.S. household, Horowitz said, while downtown office buildings are a good location for people who want to be in places that are within walking distance of stores, jobs and other destinations.