Co-living assets—like all of housing—have been hit hard during the pandemic. Before March, co-living properties were rising in popularity, offering a 30% discount on gross housing costs on a per-lease basis, while operators generated 15% higher NOI than the industry average due to the increased density. According to a new report on the asset class from Cushman & Wakefield, co-living will only see increased demand post-pandemic, as renters look for more affordable housing options.

First, however, the asset class has to survive the pandemic. Like the general apartment market, co-living properties have seen a decline in rents and vacancy as well as rent collections. The Cushman & Wakefield report shows that co-living properties' savings dropped from 30% to 23.2% as a result, with average co-living rents from March to August falling 9.4%. While significant, the decline is still less than comparable studio apartments, which have seen an 11.7% decrease in rents. Overall, the impact on co-living has been less severe for co-living properties than for multifamily.

While rental rates have fallen, rent collections have actually held up better than market-rate apartments. During the pandemic, apartment owners have reported a decrease in rent collections from 4.5% to 5.2%, but in co-living properties, delinquencies have stayed below 4% through the pandemic. Class-A multifamily assets have had even higher delinquencies exceeding 8%.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.