Yes, Adults Are Still Renting $2,000 Co-Living Dorm Rooms During the Pandemic
Nonresidents must wear masks, and some residents are staying in their rooms
On the first day of October 2019, Julia O. Test moved into a Starcity co-living house in Los Angeles. Soon, the 34-year-old photographer was joined by more housemates, about a dozen people in all from their twenties through their forties.
In Starcity housing, everyone has their own bedroom — and in Test’s case, her bedroom suite came with a private bathroom. Otherwise, the housemates share cookware, kitchen utensils, and regular household supplies. They hang out in shared living rooms. They eat meals together in designer kitchens. Many use the same bathrooms.
“For me, it’s the right way to live: You have a built-in community, and I think a lot of people would benefit from that,” she says. “Prior to that, I was in a studio high-rise in Hollywood, and it was really isolating.”
Critics of co-living arrangements like Starcity say that they are overpriced, exclusionary, and ineffective solutions to the problem of affordable housing — adult dorms for the millennial set. Now, six months into a coronavirus pandemic and a nationwide surge in cases, companies like Starcity are forced to address another uncomfortable truth: Residents of these housing developments are now living in, and sometimes being confined to, cramped quarters with total strangers.
Navigating the boundaries of shared living during a viral pandemic has been tricky at times for Test and her housemates. In all of the Starcity properties, the rules around socializing with people from outside the house are uniform and strict. If nonresidents come to visit, they must wear masks. For those living in the buildings, the general rule is that residents set their own safety rules: whatever makes them feel at ease. Some residents won’t associate too much with other residents outside of using the shared kitchens and bathrooms.
In the Starcity house where Test lives, one of the residents is immunocompromised, and in the beginning of the lockdown, he stayed mostly in his room. An older roommate would wear a mask and gloves whenever he entered the common areas. Meanwhile, Test and a few other residents continued spending time together — hanging out to watch movies, for instance — in the common spaces.
Residents of these housing developments are now living in, and sometimes being confined to, cramped quarters with total strangers.
“There was definitely tension around bringing other people into the space, but that didn’t happen that much,” Test says. “Most of us felt like we could trust each other to be quarantined together, so we didn’t need to wear masks or stay far apart,” she says. “We can still sit on the couch and watch TV together and not feel like we’re completely alone.”
Several companies across the country have marketed co-living as a solution for living in desirable locations without breaking the bank. A company called Common has residences in San Francisco, Los Angeles, New York City, and five other locations around the U.S. WeWork still runs WeLive co-living communities in New York City and Washington, D.C.
In its four years as a company, Starcity has set up 13 houses in San Francisco and Los Angeles and has plans to open new co-living communities elsewhere in California. One week after OneZero profiled the startup at the end of February, California declared a state of emergency in response to the coronavirus pandemic. Almost instantly, Starcity started feeling some of the effects.
“We typically average about a thousand inquiries per month on the demand side,” says Jon Dishotsky, Starcity co-founder and CEO. “That dropped to only a couple of hundred.”
Co-living was apparently a hard sell in the middle of a viral pandemic. Starcity made several concessions to attract renters. The company slashed rent across properties by as much as 15%. Fees for signing shorter-term leases or terminating leases were also scrapped.
When the coronavirus first emerged in California, Starcity had just finished construction on 500 bedrooms across multiple markets. The company was also in the final steps of construction on a 28,000-square-foot development in San Francisco’s Tenderloin neighborhood, its first purpose-built co-living house. That project was immediately put on pause and now won’t open up until the fall. Dishotsky says the company’s focus shifted away from development and toward taking care of existing residents.
“We tripled the amount of cleanings that we were doing, provided additional disinfectants and sanitizing wipes throughout the communities,” he says. “We eliminated in-home tours and moved to all-virtual tours, and our team rarely visited communities unless it was an emergency. When they did have to go to a community, they had to wear masks.”
The in-person events that Dishotsky considers one of Starcity’s selling points — parties, barbecues, and other gatherings to create friendships within communities — shifted to online. Trivia night, yoga, and even a live DJ all went virtual.
But these are short-term solutions to a pandemic that’s still ripping through American communities and is now spiking again in California. Co-living startups are based, in large part, on the notion of geographic scarcity and proximity to employment opportunities. But in places like the Bay Area, where many tech employers have embraced remote working, physical proximity to an employer is suddenly much less important. Twitter CEO Jack Dorsey said employees could work from home permanently even after offices are safe again. That may help explain why rent in San Francisco has dropped by almost 10% from last year: The one-bedroom apartment that cost $3,700 last year now runs for $3,360.
That said, Common and Starcity are reporting rebounding interest and even growth.
Molly Graizzaro, a senior communications manager at Common, claims that the company is “doing even better” than it was this year before the pandemic shut down America and plans to add 575 beds in Los Angeles and Fort Lauderdale.
“Most of us felt like we could trust each other to be quarantined together, so we didn’t need to wear masks or stay far apart.”
“We had signed 220 leases in June alone, our highest amount in a month to date,” says Graizzaro. “Co-living isn’t novel: It’s a response to a demand we were seeing in the market. And the demand for attainable housing will continue after Covid-19 is gone.”
Igor Popov, chief economist at Apartment List, says only time will tell how the co-living industry as a whole responds after a pandemic. But a likely acceleration of remote work, he thinks, could actually boost demand for co-living.
“People who are sitting at a desk all day alone might want to get more of the social activities that co-living has in its model,” he says.
After two slow months in March and April, Dishotsky says demand for Starcity co-living communities is popping back up. Part of that has to do with price cuts his company implemented in the spring in response to lower-than-usual rent inquiries. Part of it is also due, he argues, to the still higher-than-average price of rent in high-cost cities like San Francisco.
“There’s always been a flight to lower costs, secondary markets, and tertiary markets. That trend was happening even before Covid,” he says. “So I’m not convinced yet that this is a significantly larger trend than what was already occurring due to the cost of living.”
Dishotsky maintains that the headlines of major technology companies allowing remote work won’t fundamentally change a co-living business model. Eventually, he says, offices will open back up and job growth will continue to happen in cities where people will need more affordable housing.
“Co-living acknowledges that current housing often isn’t desirable. That doesn’t change,” Popov says. “Covid is going to delay adoption of co-living, but I think a lot of the demand will still be there.”
As of June, Dishotsky says per-month rental inquiries had jumped to 2,400, and while the occupancy rate dropped from a percentage in the mid-90s to the mid-80s, he says the company’s retention rate increased to 60%, higher than the 40% retention rate he reported to OneZero in February. Despite the pandemic, Starcity raised $30 million of venture funding in April and embarked on a European expansion: In May, it announced plans for a Starcity co-living house in Barcelona, Spain.
For Test and her fellow co-living residents, life goes on, with the same sort of uncertainties that other families and roommates have shared over the months. When the coronavirus started spreading in Los Angeles, one resident who lives with Test fell ill and was “really sick,” as Test recalls. That person ended up staying isolated in her room for two weeks. Everyone suspected it was coronavirus, although she wasn’t able to get a test.
Update: This article has been updated to better reflect Julia O. Test’s profession.