Every morning in the Euclid Manor, a 6,000-square-foot single-family home on the outskirts of downtown Oakland, California, the residence’s 13 inhabitants trample over one another in a race for the shower before preparing breakfast at a kitchen counter that seats three.
The tight quarters present opportunities for the residents, who include students and startup founders, to shape their bonds. It’s not uncommon to find them catching up on their careers and love lives all before 7:30 a.m.
This is the reality that residents signed up for when they leased an apartment with group-living startup Open Door, which runs the Euclid Manor.
For years, the “hacker house” has offered aspiring entrepreneurs a place to rest their heads – often a bunk bed – for cheap rent. In 2004, Mark Zuckerberg rented a five-bedroom house in Palo Alto, where early Facebook employees built the social network. These days, bitcoin entrepreneurs party and plot the future of money in a three-story home they share in San Francisco. There are dozens more mansions like it in the Bay Area.
The “hacker house,” “commune,” or whatever your preferred name for dwellings that pack in a large number of residents, is going mainstream as millennials continue to migrate to high-priced urban areas in droves. Startups have taken to rebranding the homes as “co-living” spaces.
Companies like Open Door and WeLive, a subsidiary of coworking giant WeWork, have evolved the hacker-house concept into all-inclusive experiences that comes with lots of perks. Residents, or “members,” as they’re often called, can join these communities and instantly tap into amenities like free internet, maid service, and new friends.
While some critics see co-living as a fringe “dorms for grown-ups” trend, the entrepreneurs behind these startups want to make co-living a major category in the real-estate market.
It may be on its way there. Common, a co-living startup, received almost 10,000 applications to fill its nine residences across three major US cities in 2016. The company is gearing up to rent hundreds more rooms this year. Open Door, founded in 2013, has established three co-living spaces in the Bay Area. The startup plans to expand from 40 bedrooms (with 140 more in the pipeline) to 1,000 rooms by the end of 2018.
In addition to bunking at Euclid Manor, where the built-in bookcases and velvety couches look torn from the pages of “Sherlock Holmes,” Jay Standish cofounded the company that operates the house. As he led me on a tour around the estate, we passed a resident taking a call on the deck and a woman working on her laptop in the den. In the dining room, a banquet table stretched the length of the room. It’s where residents sit for family-style dinners and meetings.
“We don’t just ignore each other and go about our day when we’re stressed out … I’ll actually drop in and be, like, ‘What’s going on in your life?'” Standish says. “It’s a way to start the day that’s actually honoring my humanity.”
Standish, a former web designer, and his cofounder, Ben Provan, a former mechanical engineer, launched Open Door because they wanted to create spaces that brought together a wide variety of urban dwellers under one roof. In Standish’s vision, the spaces wouldn’t be centered on building the next Facebook but on forming authentic communities.
“That was part of why we decided to use the word ‘co-living,’ because it was a new thing,” he says. “You could shrug off all the past assumptions about what communal living looks like.”
Their first project, called the Farmhouse, opened in Berkeley in 2014. It holds 16 people, has a vegetable garden and a chicken coop, and is known for its jam sessions around the fire pit. Another project, the Canopy, sits on the edge of a gentrifying neighborhood in Oakland, and has a workshop where its 12 residents can be found building art projects for Burning Man.
There’s a rich array of co-living spaces for those who can handle the lifestyle. In some cases, residents pay a premium for the privilege of having so many roommates.
WeLive, the co-living offering from coworking giant WeWork, launched locations in New York City and Arlington, Virginia, in 2016. The company’s furnished, flexible apartments serve as short-term landing pads for people moving to a new city and urban dwellers looking to make friends outside the office.
In its Wall Street location, the company charges $1,900 for a Murphy bed that pulls out from the wall in a private room. Private studios start at $3,050 ($500 more than the median rent for a studio in Manhattan). The Arlington location is slightly cheaper.
According to Miguel McKelvey, chief creative officer of WeWork, co-living was “always part of the equation” for the brand. He and cofounder Adam Neumann envisioned an ecosystem of office rentals, residences, fitness centers, and even barber shops that served the concept of community living.
“It was always thought of, ‘How can we support this person who wants to live more collectively, live lighter – who wants to have less stuff, who wants to pursue their passion, pursue a life of meaning, rather than looking for just material success?'” McKelvey tells Business Insider.
WeWork has the reputation and the cash to roll out more co-living spaces than its competitors. The company already has a global presence, with 90,000 WeWork members in more than 100 locations across 14 countries.
But WeLive’s co-living business has rolled out more slowly than anticipated. The company reportedly told its investors in 2014 it planned to launch 14 WeLive locations by the end of last year. It currently operates two.
Real estate is a larger, more complicated investment than an office rental, McKelvey says.
“In the big picture, we see WeLive as a huge opportunity, as big as WeWork, for sure. I think we’re lucky to have a good foundation in place where people trust us and are interested in the product,” McKelvey says. He did not comment on how many WeLive residences may open in the future.
Common, founded in 2015, offers more diverse types of co-living.
Its residences are as varied as a 12-bedroom walk-up in San Francisco’s fast-gentrifying SoMa neighborhood to a new 135-person apartment building in Brooklyn’s Boerum Hill. While the company’s $23 million in funding pales in comparison to WeWork’s $3.6 billion, Common operates more properties and is focused on making co-living work at scale.
Common says it hasn’t been able to keep up with demand for its co-living spaces and receives 300 applications for rooms in its buildings each week.
To learn the market, Common founder and CEO Brad Hargreaves visited dozens of shared housing developments, from hacker houses in the Bay Area to a desert commune in Arizona founded in the 1980s. He studied the pain points and cherry-picked the details he liked for Common’s floor layout.
“A lot of what we’re trying to do is rethink the layout of buildings as a whole to adapt for community and to keep the benefit of living with others,” Hargreaves says. “If we take all the reasons why people don’t like living with roommates and … systematically address each of those, we come up with a much better product on the other end.”
There are a few design principles core to the Common experience. No two people will ever share a bedroom. The multiple common areas are what Hargreaves calls “human-scale,” or small enough to be intimate and inviting. They install private bathrooms whenever possible.
In a residence in Brooklyn, members can choose between two entrances, one that enters into the common room (where an interior staircase leads to the bedrooms) or a staircase that bypasses any roommates and accesses the bedrooms. The layout gives members the chance to be social when they’re seeking community and privacy when they prefer it.
Today, a banner across the company’s website reads “Home. Made.” It captures the paradox of Common’s desire to create a lived-in, familiar environment that is also carefully engineered.
When Micah and Dianna Baylor moved to San Francisco for a job opportunity last year, they expected to pay between 200% and 400% more on rent than what their two-bedroom back in Texas cost. They scoured the internet and wound up in 16 different Airbnb rentals before landing in Common. They’re one of several couples who call the co-living space home.
They became members in September and said they intend to stay in Common as long as they live in San Francisco. Their studio space has a private bathroom and kitchenette, with storage overhead that they can access with a ladder. Dianna, a lifestyle blogger and photographer, decorates the room with eucalyptus branches she picks up at the farmers market on Saturdays.
“My favorite thing about [Common] is it’s given me the ease of having friends that aren’t all work-friends,” Micah, 22, says. “Back in Texas, I worked all day, I went home, I saw Dianna. I never saw anyone that wasn’t talking about insurance, which you can imagine gets pretty old.”
Down the street from the Baylors’ residence, a nearly identical co-living space designed by Common is home to a professional chef, graduate students, and several Samsung employees.
Kevin Suh, a software engineer at an early-stage tech startup, said that when he moved into Common – his first residence in San Francisco – he expected it to be like a hacker house where people constantly discussed tech. He discovered a diverse group of professionals who were happy to relieve him from talking shop.
“Some of these people in this home are my best friends in San Francisco,” Suh says.
In many ways, co-living with a house full of strangers isn’t all that different from normal roommate living. Some Common members and the vast majority of Open Door dwellers share bathrooms. The noise takes some getting used, according to Suh.
At Euclid Manor, Standish tried to get his housemates to pony up $30 each for professional cleaning services each month, but some expressed concerns around the class dynamics of hiring someone to clean their house. They share the chores instead.
Standish believes millennials have a greater tolerance for the various quirks of co-living because their lives play out on social media. Each major life experience is a moment to be shared across their network anyway.
The rise of co-living does not necessarily mean the death of traditional home rental and ownership. In 2016, homeownership rates among Americans fell to its lowest level in more than five decades. Millennials in particular are putting off planting their roots. However, a 2015 Fannie Mae survey found 91% of renters ages 25 to 34 plan to buy a home someday.
The challenge for co-living companies could be converting short-term renters into long-term enthusiasts. But Matt Mazzeo, a partner at venture firm Lowercase Capital and an investor in Common, sees a cultural shift underway that sets startups like Common up for success.
“Home ownership as a life goal has dramatically shifted, and it’s not limited to millennials. I think it’s across society. If anything, the housing crisis sort of disavowed the fantasy that home ownership meant security,” Mazzeo says. “People just care about belonging.”