Chat
https://demo.wowonder.com/upload/photos/2019/09/PDho3T4NQVeTkTpZkby4_02_7135f847c7358567b787f22d0b249fde_avatar.jpg?cache=1567419308 Profile Picture

Lorem ipsum dolor sit amet consectetur, adipisicing elit. Placeat cupiditate nihil magni similique molestias asperiores omnis at itaque vero eveniet.

Consequuntur error saepe dolorem sequi perspiciatis veniam tenetur unde dolor.

https://demo.wowonder.com/upload/photos/2019/09/PDho3T4NQVeTkTpZkby4_02_7135f847c7358567b787f22d0b249fde_avatar.jpg?cache=1567419308 Profile Picture

Lorem ipsum dolor sit amet consectetur, adipisicing elit. Placeat cupiditate nihil magni similique molestias asperiores omnis at itaque vero eveniet.

Consequuntur error saepe dolorem sequi perspiciatis veniam tenetur unde dolor.

You can create up to 5 ads

Please use our Facebook groups to share your ads for more views

Co-Living, Micro Units: Multifamily Real Estate Reimagined

Basic information
Date of placement
5
0
0

As the rents required to make new high-end construction projects viable climb higher and higher, the industry is responding and adapting for the rest of the renter market, explains Avison Young's Jay Maddox.

Commercial Property Executive | Real Estate News

Jay Maddox  Photo courtesy of Avison Young

It’s no secret that disruptive forces are reshaping real estate, particularly in the rental housing sector, resulting in a range of new platforms such as micro-units and co-living. As these new platforms have rapidly gained popularity, commercial real estate lenders now find themselves in the position of adapting and responding.

How We Got Here

Housing affordability is under serious pressure, fueled by employment growth opportunities of the new digital economy, migration by Millennials and Gen-Xers to trendy urban infill areas, delayed household formation, the desire for a sense of community and the added pressures of student loan debt. The rents required to make new high-end construction projects pencil in highly desirable urban infill locations are increasingly out of reach for tenants. Developers first responded by building ‘micro units’ as small as 450 square feet in order to meet the burgeoning demand. Micro units are now widely accepted and this asset class has significantly outperformed other unit types.

The Co-Living Value Proposition

The new kid on the block is “co-living.”  Similar to student housing, co-living tenants are willing to sacrifice some privacy for affordability, location, lifestyle and community. Co-living operators such as Common, Quarters and WeLive, have raised hundreds of millions in venture capital to acquire and manage thousands of co-living units. These operators long-term master lease a portion or all of an apartment building, and sublease rooms. Individual tenants lease a furnished bedroom within a two (or more) bedroom apartment, with a common living area and kitchen. The third party operator screens and prequalifies all tenants, maintains the building and common area, furnishes the units, pays utilities, and may provide cleaning and linen services. The rent is a fraction of the cost to rent an apartment in the same area, and the tenant avoids the out of pocket costs for furniture and appliances. And, if the roommate situation isn’t working out, a tenant can move to another apartment seamlessly.

Co-living enables the developer to “de-risk” its project while potentially earning outsized returns.  It provides access a larger pool of renters than simply offering high-end luxury apartments, while mitigating or avoiding lease-up risk and related marketing costs.  Revenue per square foot is maximized, and the net income from the master lease exceeds a conventional rental scenario as operating costs are limited to property taxes, insurance and maintaining the building shell. However, the developer typically has to demise the apartment units to a co-living-friendly design, which can cost more than standard apartments.  In exchange, the master tenant will enter into a long term master lease, post a large deposit to secure its performance, provide all the FF&E, and manage the building. 

New Challenges for Lenders

Theoretically, co-living de-risks a multifamily project for lenders.  However, as a new asset class, for the most part lenders are underwriting projects to a conventional rental default scenario, in some cases requiring increased equity and/or replacement reserves. This is true both for construction loans and permanent loans. The rationale is that these new uses are unproven, and it is unclear whether co-living is a fad or here to stay.  If the operator fails, the owner’s default scenario is to run the project as conventional apartments, meaning many units would likely need to be reconfigured to traditional units.  Over time, as the business model proves successful, owners are hoping that lenders will look to credit quality behind the master lease and underwrite co-living projects as NNN leased investments as opposed to apartment assets.

Lenders don’t pick winners and losers, they just try to manage the risk.


(0)
0.0
Dislike 0
ОТН 0
Like 0

News list


19:14 Defaults on the Rise with Possible Recession on the Horizon
18:41 EMERGENCY! THE RECESSION IS COMING! - KEVIN WARD
18:30 LA-Area Retail Center Sells for $31M
18:15 Regus Renews, Expands Leases in Long Island
17:49 Real Estate Agents Answer: What Can I Do To Sell My Home Fast?
17:44 ROTTERDAM KRUISKADE 2A Netherlands Sotheby's International Realty
17:28 Former NBA player Tiago Splitter parts with Malibu retreat
17:00 Lead Conversion Secrets from Million Dollar Real Estate Agents
17:00 July pending home sales reverse course, falling 2.5% despite low mortgage rates
16:45 Vancouver Real Estate Developers Drop New Inventory By Over 95%
16:30 Where Does Your Pet Want to Live?
16:01 Homes for Sale in New York and Connecticut
16:01 Homes for Sale in Brooklyn and Manhattan
16:00 On the Market in the New York Region
16:00 On the Market in New York City
15:30 The Fed Cut Rates. What Does This Mean For Real Estate Investors?
15:16 BFIN Sells Office Campus in Houston for $90M
15:16 Toronto New Condo Prices Rise, While Detached Losses Get Bigger
15:00 “Vivid Visions” and 90-Day Sprints—Brandon’s Approach to Mobile Home Park Investing | BP 345
15:00 Real Estate Firm Will Now Publish Agent Commissions On All Home Listings
15:00 More Than A Third Of Home Buyers Think A Recession Is Coming
15:00 Three Core Strategies To Actively Increase Your Rental Property's Value
13:20 Raleigh Multifamily Report – Summer 2019
13:09 Atlanta Embassy Suites Hotel Scores $39M Loan
12:53 New Owner for Two Liberty Center in Arlington
12:00 A Couple Aims to Stretch the City’s Boundaries. Which Home Did They Choose?
11:49 Data Center Market Poised for Serious Expansion
11:29 Property Box Podcast #2 - Nicholas Wallwork
11:13 Regus-Leased Office Asset Changes Hands in Greater Phoenix
10:20 Starwood JV Buys Suburban Austin Office Asset
03:18 Pierce Brosnan scoops up Santa Monica home for nearly $3 million
02:54 Secret Garden Arts & Crafts Estate Lists For $4.5 Million In San Francisco
02:28 Nurturing Leads With Your IDX Website
01:44 7.5 Hours of Real Estate Lies in 26 Minutes
01:12 Jenny Craig sheds beachfront Del Mar mansion for $22 million
01:09 InMexico Nominates The Agency for 2020 Best in Mexico Awards
00:44 Game of Thrones Has Nothing On This $1.9 Million Dragon Tales Home
00:40 Meet Real Estate Investor Mat Piche aka The Fruitful Investor!
00:31 Randy Jackson's former Tarzana home makes its way to market once more

01:44 7.5 Hours of Real Estate Lies in 26 Minutes
19:14 Defaults on the Rise with Possible Recession on the Horizon
18:41 EMERGENCY! THE RECESSION IS COMING! - KEVIN WARD
18:30 LA-Area Retail Center Sells for $31M
18:15 Regus Renews, Expands Leases in Long Island
17:49 Real Estate Agents Answer: What Can I Do To Sell My Home Fast?
17:44 ROTTERDAM KRUISKADE 2A Netherlands Sotheby's International Realty
17:28 Former NBA player Tiago Splitter parts with Malibu retreat
17:00 Lead Conversion Secrets from Million Dollar Real Estate Agents
17:00 July pending home sales reverse course, falling 2.5% despite low mortgage rates
16:45 Vancouver Real Estate Developers Drop New Inventory By Over 95%
16:30 Where Does Your Pet Want to Live?
16:01 Homes for Sale in New York and Connecticut
16:01 Homes for Sale in Brooklyn and Manhattan
16:00 On the Market in the New York Region
16:00 On the Market in New York City
15:30 The Fed Cut Rates. What Does This Mean For Real Estate Investors?
15:16 BFIN Sells Office Campus in Houston for $90M
15:16 Toronto New Condo Prices Rise, While Detached Losses Get Bigger
15:00 “Vivid Visions” and 90-Day Sprints—Brandon’s Approach to Mobile Home Park Investing | BP 345
15:00 Real Estate Firm Will Now Publish Agent Commissions On All Home Listings
15:00 More Than A Third Of Home Buyers Think A Recession Is Coming
15:00 Three Core Strategies To Actively Increase Your Rental Property's Value
13:20 Raleigh Multifamily Report – Summer 2019
13:09 Atlanta Embassy Suites Hotel Scores $39M Loan
12:53 New Owner for Two Liberty Center in Arlington
12:00 A Couple Aims to Stretch the City’s Boundaries. Which Home Did They Choose?
11:49 Data Center Market Poised for Serious Expansion
11:29 Property Box Podcast #2 - Nicholas Wallwork
11:13 Regus-Leased Office Asset Changes Hands in Greater Phoenix
10:20 Starwood JV Buys Suburban Austin Office Asset
03:18 Pierce Brosnan scoops up Santa Monica home for nearly $3 million
02:54 Secret Garden Arts & Crafts Estate Lists For $4.5 Million In San Francisco
02:28 Nurturing Leads With Your IDX Website
01:12 Jenny Craig sheds beachfront Del Mar mansion for $22 million
01:09 InMexico Nominates The Agency for 2020 Best in Mexico Awards
00:44 Game of Thrones Has Nothing On This $1.9 Million Dragon Tales Home
00:40 Meet Real Estate Investor Mat Piche aka The Fruitful Investor!
00:31 Randy Jackson's former Tarzana home makes its way to market once more

19:14 Defaults on the Rise with Possible Recession on the Horizon
18:41 EMERGENCY! THE RECESSION IS COMING! - KEVIN WARD
18:30 LA-Area Retail Center Sells for $31M
18:15 Regus Renews, Expands Leases in Long Island
17:49 Real Estate Agents Answer: What Can I Do To Sell My Home Fast?
17:44 ROTTERDAM KRUISKADE 2A Netherlands Sotheby's International Realty
17:28 Former NBA player Tiago Splitter parts with Malibu retreat
17:00 Lead Conversion Secrets from Million Dollar Real Estate Agents
17:00 July pending home sales reverse course, falling 2.5% despite low mortgage rates
16:45 Vancouver Real Estate Developers Drop New Inventory By Over 95%
16:30 Where Does Your Pet Want to Live?
16:01 Homes for Sale in New York and Connecticut
16:01 Homes for Sale in Brooklyn and Manhattan
16:00 On the Market in the New York Region
16:00 On the Market in New York City
15:30 The Fed Cut Rates. What Does This Mean For Real Estate Investors?
15:16 BFIN Sells Office Campus in Houston for $90M
15:16 Toronto New Condo Prices Rise, While Detached Losses Get Bigger
15:00 “Vivid Visions” and 90-Day Sprints—Brandon’s Approach to Mobile Home Park Investing | BP 345
15:00 Real Estate Firm Will Now Publish Agent Commissions On All Home Listings
15:00 More Than A Third Of Home Buyers Think A Recession Is Coming
15:00 Three Core Strategies To Actively Increase Your Rental Property's Value
13:20 Raleigh Multifamily Report – Summer 2019
13:09 Atlanta Embassy Suites Hotel Scores $39M Loan
12:53 New Owner for Two Liberty Center in Arlington
12:00 A Couple Aims to Stretch the City’s Boundaries. Which Home Did They Choose?
11:49 Data Center Market Poised for Serious Expansion
11:29 Property Box Podcast #2 - Nicholas Wallwork
11:13 Regus-Leased Office Asset Changes Hands in Greater Phoenix
10:20 Starwood JV Buys Suburban Austin Office Asset
03:18 Pierce Brosnan scoops up Santa Monica home for nearly $3 million
02:54 Secret Garden Arts & Crafts Estate Lists For $4.5 Million In San Francisco
02:28 Nurturing Leads With Your IDX Website
01:44 7.5 Hours of Real Estate Lies in 26 Minutes
01:12 Jenny Craig sheds beachfront Del Mar mansion for $22 million
01:09 InMexico Nominates The Agency for 2020 Best in Mexico Awards
00:44 Game of Thrones Has Nothing On This $1.9 Million Dragon Tales Home
00:40 Meet Real Estate Investor Mat Piche aka The Fruitful Investor!
00:31 Randy Jackson's former Tarzana home makes its way to market once more
I agree and close
x Cookies text