Executives at Ollie, the New York-based developer that is a leader in the emerging “co-living” apartment market, say there’s a good chance they will build a project in the Greater Orlando area.
Andrew Levin, Ollie’s director of real estate partnerships, said Orlando presses all the right buttons for a co-living project, where apartments are specially designed for two and three renters to share. Each renter has a bedroom that also serves as an individual living space. The renters share a common space with a full kitchen.
“We were primarily looking more at the Miami-Fort Lauderdale area,” Levin told GrowthSpotter. “But when I looked at Orlando, it was eye-opening. I learned how diversified the economy is there. And with UCF, there’s a built-in demand. So, there’s a strong case for a co-living project there.”
Though other companies are developing co-living projects, Ollie seems to be ahead of the game. The company operates two co-living apartment buildings with a total of 252 beds, and has contracted with developers to build another eight buildings.
Ollie realized a company goal when it secured a $150 million construction loan from AIG to build a 40-story building in the Long Island City neighborhood of Queens, New York.
“That right there distinguishes us from the other players in this market,” Levin said. “Getting lenders on board with our product type is big. We’re very pleased to see that AIG, a brand name, is a partner there.”
Clearing that hurdle of attracting an institutional investor should make it easier to secure capital for future projects, Levin said. In fact, Ollie is now considering proposals from developers to partner on 67 potential projects across the country.
Whether Orlando will be one of those cities with an Ollie building remains to be seen. Levin said each market is different, but the company judges potential project sites the same way developers of traditional apartments do.
Orlando’s vibrant economy is a big plus, as is the high level of education, Levin said. Compared to New York and Los Angeles, Orlando’s property and construction costs are more affordable.
Ollie planners also look at whether a market has big institutions, such as universities, hospitals and cultural venues. Mass transit is also a plus. Orlando checks most or all those boxes.
“We’re looking at population growth, income, wages, diversification of the economy,” Levin said. “That’s no different than the typical real estate developer would think about. Then we do our own analysis to see if co-living would be viable.”
The idea of a strategic focus on co-living was born in New York City, where one-bed studio apartments rent for more than $2,500 a month. Many people don’t make the $100,000 yearly salary needed to make such payments.
In response, renters in New York have been doubling and tripling up, even putting up walls to subdivide apartments in defiance of New York City housing regulations. The city rarely cracks down on these informal, shared-living arrangements.
Levin said Andrew Bledsoe, one of Ollie’s founders, got the idea for building co-living apartments when he rented a one-bedroom in Manhattan’s financial district. Bledsoe put up two walls and marketed the fake bedrooms on Craigslist.
He was flooded with callers who were ready to rent the space, sight unseen. Bledsoe settled on two people who agreed to pay $1,400 a month for their “bedrooms.” Their payments covered the $2,800 monthly rent, meaning the Ollie founder was living rent-free.
“That experience showed him there is clearly a supply-demand mismatch which we kind of knew on the surface, but he was living it,” Levin said. “He was seeing a massive amount of demand for a pretty inferior living experience.”
After their first projects, Ollie has discovered they cannot build the living spaces small enough, especially in New York and Los Angeles, where affordability is the prime factor. Some of Ollie’s studio apartments are 180 square feet.
“What we’re seeing is they are consistently the highest leasing,” Levin said. “They don’t think about it on a price-per-foot basis. They think about a monthly cost basis.”
In other markets, such as Pittsburg, where Ollie is now pre-leasing 166 co-living beds in a building slated for completion this fall, affordability may be just one of several attractions.
Levin said the company focuses on two dramatically different demographics: millennials, ages 22-34, and baby boomers. What these two groups have in common is a desire to live in an urban environment, close to recreation and cultural venues, without the upkeep of a house, or the need to store a lot of stuff.
Affluent baby boomers often use the co-shared apartments as a second residence in the city where they can spend weekends, or sleep on work days so they don’t have to drive home.
Levin described the company’s suites as having a “plug-and-play, hotel experience.” New tenants move into a furnished suite with high-speed WiFi, premium television programming, housekeeping and social club membership. Ollie’s buildings feature a live-in community manager whose job is to bring people together for different events inside and out.
“We think more of ourselves as a consumer company as opposed to real estate company,” Levin said.
Ollie also wants to stand out for ensuring its apartments are compliant with local building and housing regulations. When sizing up a potential location, the company’s team of architects meets with city officials before a building is designed.
“If it’s not code compliant we’ll pass on the opportunities,” he said.