San Francisco Chronicle - (Sunday)
Coliving hopes rise with plans for SoMa tower
Over the past few years, coliving housing developments have sprung up in major cities across the country. More than 3,000 new bedrooms are offering a cheaper place to live in what some have called “dorms for adults” or “coed frats.”
While large groundup coliving projects have been built in places like Chicago, New York and Los Angeles, San Francisco has so far been left out of the action.
Skittishness from lenders, skyrocketing construction costs, and the nation’s highest affordable housing requirements have made it tough for developers in San Francisco to get these microsuites organized around shared
living spaces off the ground.
That could soon change. A big experiment in coliving is about to rise on a narrow South of Market alleyway — and it won’t look anything like the rambling, tapestryfilled Victorians associated with communal living in San Francisco.
Instead the 270bed coliving building at 457 Minna St. will be glass and concrete. The $90 million project will be 16stories tall. Residents will pay $2,000 to $2,400 for the marketrate rooms — about 30% lower than a similar unit in a new building would be. Half of the rooms will be offered for belowmarketrate rents of $800 to $1,100.
The idea is to create an instant community for the young workers flocking to jobs in San Francisco while providing them with a more affordable option than typical new apartment developments.
The developer of the Minna Street project, Starcity of San Francisco, also has an 803bedroom project set to start construction later this year at 199 Bassett St. in San Jose and major developments under way in Los Angeles. Starcity CEO Jon Dishotsky said the San Francisco and San Jose developments are possible because of lenders changing their attitudes about coliving.
“Three years ago we couldn’t get any lenders to talk to us,” Dishotsky said. “We talked to 40 investors and went zero for 40. Lenders didn’t know how to value it because there were no” comparable properties.
In contrast, as Starcity has been raising money for its newest developments, it got proposals from 10 lenders.
“There is a huge appetite — it changed overnight,” he said.
How it works: For the past few years, Starcity has been honing its concept of coliving in progressively larger spaces — first six units in West SoMa, then 12 rooms in North Beach, then 20 rooms in the Mission. The group has taken over empty hotels and apartment buildings, and converted underused commercial buildings into coliving spaces.
At Starcity’s existing 20bedroom building in the Mission, resident Katie McKee likes the price and the fact that the units came furnished. She said that it offered just what she wanted when she moved from New York to take a job with Chronicle Books: community. She spends at least an hour in the common kitchen and dining room every evening and frequently cooks and eats with her coliving mates. There are dinner parties, beach excursions and Dolores Park hangouts.
“I didn’t know a soul in San Francisco,” she said. “When I moved in it was like an instant community. I’ve made some lifelong friends here.”
Starcity will build on the model of its existing projects at the Minna Street building, which will have 18 bedrooms with a large industrial kitchen and living area on each floor. Unlike some of its smaller reuse projects, which have shared bathrooms, each bedroom on Minna Street will have a private bathroom. A roofdeck with barbecue areas and groundfloor common spaces will give residents a place to connect. Dishotsky said 18 rooms per kitchen is higher than some of the properties, but there’s a reason for that ratio.
“Communities that have more people sharing the kitchen perform better,” he said. “There is more serendipitous interaction, more new friends. People tend to behave better in larger groups.”
Other groundup projects: Starcity is joining the coliving boom unfolding across the United States. There are about 3,700 coliving beds in operation and 9,300 in the pipeline, according to a report from Cushman & Wakefield, which looks just at the companies doing new groundup construction and adaptive reuse. This doesn’t include the dozens of less institutional “hacker houses” or other collectives that have long thrived in the Bay Area.
In addition to Starcity, companies looking at doing groundup coliving development in the Bay Area include Open Door, Common and Quarters.
Quarters already operates about 2,000 rooms in Europe and recently raised $300 million to expand into the United States. The company, a subsidiary of Medici Living Group, plans to develop 1,300 rooms in the United States, with the Bay Area among the top targets for groundup development or reuse of existing buildings.
Volker Binnenboese, a spokesman for Quarters, said the company, which has built in New York and Chicago, is looking to buy properties in San Jose, Oakland and San Francisco, with Dogpatch, the Marina and the Mission as target neighborhoods. The company caters to techsavvy Millennials ages 18 to 35 who are on their first or second jobs.
“We really want to establish a global brand for coliving and be present in every major city that has a tech hub,” he said.
Developer Common is further along than Quarters. It has 70 beds in the Bay Area
Jon Dishotsky, CEO of Starcity, a coliving developer and another 600 beds in its pipeline, said Common CEO Brad Hargreaves. Projects are in the early stages in San Francisco, Oakland and Berkeley, but it is too early to talk about specifics, he said. Common focuses on middleclass workers who earn $40,000 to $80,000 a year, he said — a group that has been left out of the mostly highend rental projects that have popped up over the past decades in coastal cities such as San Francisco, New York and Seattle. Rents are $1,200 to $1,800 a month.
“It’s all about affordability — this is an underserved segment of the renter market in big U.S. cities,” he said.
Jay Standish, the CEO of Open Door, said San Francisco still hasn’t seen any groundup coliving development because the city has skyhigh construction and land costs, a scarcity of available building sites and a famously arduous approval process. But these challenges also make it appealing for coliving developers. There’s a huge demand among entrylevel workers who are looking for an alternative to the $3,000amonth studios for rent in SoMa and Mission Bay.
“San Francisco is a more difficult place to do any type of development — it has more to do with that, the costs, the lack of sites, and how long it takes to get something” approved, he said. “As the coliving concept is seen as less risky, you’ll see it happen in San Francisco in the near future.”
Questioning the model: But while some developers are rushing into coliving, others are rushing out or deciding against it.
Developer Danny Haber, who established coliving buildings in San Francisco’s South of Market and in Oakland in 2013, has exited the business, citing too much churn among tenants.
Haber’s projects were criticized for converting affordable singleresidency hotels into “tech dorms” catering to a younger and more affluent demographic.
Haber said it wasn’t the politics that turned him off to the idea.
“Coliving is a bad business model,” Haber said. “For us, the average stay was less than a year. People love it for the first six months, and then they want their own home.”
Other San Francisco housing innovators have looked at coliving but decided against it. Patrick Kennedy’s Panoramic Interests builds microunits, but he is not interested in the coliving model.
“There is the social element of (colivxxxxing) we are not comfortable with,” he said. “We are builders and developers, not cruise ship directors or party planners.”
Kennedy’s bedrooms are small but have a burner and a microwave. “You can make a cup of coffee without having to go out in your bathrobe and greet your neighbors,” he said. “You can be as social or as misanthropic as you want to be.”
But Dishotsky said the model can be both profitable and help solve the region’s housing crisis by helping young workers who are struggling to afford to live in the region.
The average Starcity tenant is 33 and earns $75,000 a year. Less than 30% of Starcity’s residents work for tech companies. Tenants include teachers, graduate students and hospitality workers.
As a time when an increasing number of middleincome workers are being squeezed out of highpriced cities, Dishotsky hopes that projects like his big coliving projects in San Francisco and San Jose will “serve a more diverse group of people who want to remain in urban centers.”
“We think great cities should be accessible to everyone,” he said.
“Three years ago, we couldn’t get any lenders to talk to us. We talked to 40 investors and went zero for 40 . ... It changed overnight.”
J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen