Co-living Valuations Exceed Multifamily in Many Cities

Prior to March 2020, co-living properties were rising in popularity, offering a 30% discount on gross housing costs on a per-lease basis. At the same time, operators generated 15% higher NOI than the industry average due to increased density. And as renters look for more affordable housing options, co-living will likely garner increased demand post-pandemic, according to a co-living report from Cushman & Wakefield. As a result, most industry experts believe the overall valuation impact has been less severe for co-living properties than for multifamily. Indeed, the sector was outpacing multifamily valuations pre-pandemic and seems poised to continue.

But that is speaking generally. When conducting such an analysis, It is important to distinguish between the different methods of valuing co-living arrangements versus traditional multifamily developments. Participants in CBRE’s weekly podcast tackled this subject recently.