Based in San Francisco, Starcity is one of the largest coliving owners, developers and operators in the US. We’re a global company with coliving communities in the San Francisco Bay Area, Los Angeles, New York City and Barcelona. Our company’s mission is to make great cities accessible to everyone, and we do this by providing furnished affordable-by-design housing to urban renters seeking value, convenience and community.

Earlier this year, the COVID-19 pandemic spurred our business to act quickly and evolve. Starcity augmented its approach to community operations in order to meet head-on the unique challenges of the pandemic, and the results are in. Starcity, and coliving, has outperformed traditional multifamily. Coliving rent per square foot premium over traditional multifamily apartments has actually grown from 18.2% to 22.2% over the last year according to a report by Cushman & Wakefield. Occupancy at Starcity, which declined from a pre-COVID figure of 93.1% to just under 80% in May, has since steadily increased to 90% over the second half of the year, with markets like Los Angeles exceeding pre-COVID levels.

Online inquiries have steadily increased since May and reached new heights in Q3 2020. Rent collections have consistently remained above 98%, exceeding the national multifamily average significantly.

Early terminations, which peaked in the initial months of the pandemic, have re-approached historic pre-COVID monthly rates.

How did we get there?

• Community cleaning frequency was increased twofold
• Virtual tours were put in place - as well as hi-res video tours generated - to give people a peek into their potential home
• Leasing efforts, and team visits transitioned to a fully virtual setting
• We implemented a strict no-guest policy during shelter-in-place
• In-person events have largely gone virtual, with the exception of small gatherings in outdoor amenity spaces.
• Our events team has done creative twists like scavenger hunts and postcard writing to ensure that our community members stay connected
• PPE was distributed to members at a subsidised cost, with a portion of the proceeds being donated to healthcare professionals
• We received a few positive press hits that gave first-hand accounts of what it’s like to live in coliving during COVID
• Our core demographic is largely unaffected by the debilitating effects of COVID-19.

These quick and necessary measures have resulted in positive benefits for our members and Starcity as a whole. Coronavirus cases have been exceptionally limited across our communities and member engagement has remained active, with high participation in virtual events. While some members sought early terminations at the onset of the pandemic to ride out the events of the year closer to home or with loved ones, others were drawn to Starcity precisely so that they could maintain meaningful social connections during an otherwise isolating time. Back in July, one of our members in Venice, Julia Test, wrote about what it meant to her to live in community during the lockdowns, saying:

“I think about what if this would have happened while I was in my own studio alone in a high-rise, it would be so horrible. I would be so lonely ... I know that communal living is such a crazy concept in the American culture, especially during a global pandemic, but I truly think it’s the way we should all be living. Having the support of a built-in community in your home is incredibly powerful.”

The real estate industry is studying coliving’s viability as a new asset class during the most unique set of economic and global challenges that the industry has faced in over a decade. Though the pandemic is not over and the recessionary after-effects remain to be seen, it is more clear than ever before that coliving is here to stay. Whether in good times or in bad, there will be a sustained need for affordable-by-design middle-income housing, a need for community and robust demand for experienced operators who can provide an all-inclusive branded offering that gives urban renters a convenient and delightful turnkey living experience in the cities they want to call home.

As we look to future developments, our most exciting milestones lie ahead. In early December Starcity acquired Ollie, an industry leading New York-based coliving operator with institutional-grade assets in New York City and Los Angeles. With Ollie’s existing assets & future development pipeline joining the Starcity family, our current portfolio now approaches approximately 1,500 units under ownership and management, and more than 3,000 units committed to development in existing and new markets.

Due to Starcity’s flexible business model and dual verticals of ownership and operations, we are able to team up with a broad array of industry-leading players such as Greystar, La Salle, Open House, Brasa Capital and others as either a co-investor, development advisor, property manager or some combination of these distinct roles. Our team relishes the opportunity to be involved in all parts of the development process. Being involved at an early stage allows us to have skin in the game and help mold projects into unique and innovative coliving offers.

One of Starcity’s earliest acquisitions, in which our team acquired, entitled, capitalised and redeveloped a historic asset in Downtown San Francisco, is soon to welcome its first residents. Starcity Tenderloin is a 55-unit development located in the heart of San Francisco, just steps from Union Square, countless top regional employers and world class public transit. Our community at 229 Ellis Street will be just the latest chapter in a storied history - one where this neoclassical edifice housed ornate Turkish baths for decades, and then served as a gathering place for San Francisco’s budding LGBTQ community in the 1960’s and 70’s. After being ordered to close by Mayor Feinstein in the 1980’s, the building largely sat vacant, waiting for a new owner to breathe new life into this once-vibrant destination.

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Since 2017, Starcity has been hard at work to restore this one-of-a-kind property and introduce the first purpose-built coliving offering on the West Coast. Utilising San Francisco’s unique Group Housing planning use code as a foundation for our building program, this community will include a communal kitchen, dining and lounge spaces for residents to use and interact with each other on every floor.Intricate exterior details, elegant mood lighting, artful mosaics and restored brickwork give a nod to the building’s past life as a colourful and diverse gathering place for San Francisco’s leisure-seekers.

In Starcity’s earlier adaptive reuse projects, we found that cohorts of 10-15 members sharing key common areas was a very successful ratio that ensured greater social interaction, member happiness and increased length of stays. Contrary to popular belief, sharing these core spaces with a greater number of people results in a higher likelihood of chance encounters and meaningful social bonds being formed. This finding in part drove the design of floor plans at Starcity Tenderloin, where up to 12 residents on each floor will share their own set of shared amenity spaces. Aside from other building amenities such as a panoramic rooftop and a cellar-level speakeasy space, the building’s entry will play host to a Community Center in partnership with the Transgender Cultural District, the first designated Transgender historic district in the United States. This centre will include a gathering space and event programming for residents and the neighborhood at large. Every unit at Starcity Tenderloin will come furnished with household essentials, and some units will even include Starcity’s own Airloft, an electric murphy-bed designed and engineered by our own R&D team. With the push of a button, residents’ beds will retreat into the wall, revealing a comfortable sofa that dramatically increases the functionality of small living quarters.

Our team recognises that the Tenderloin has played a vital role in San Francisco - not only as a refuge for the LGBTQ community, but as a culturally diverse and enduring working class neighborhood that remains one of the most vibrant and affordable choices for San Francisco’s newcomers. In overseeing the development of this asset, Starcity is ensuring that our community honors the important legacy of the neighbourhood and becomes a welcomed addition.

The experience of designing, entitling, capitalising and building Starcity Tenderloin is now informing some of our largest and boldest development projects. Just a short walk from the Tenderloin is SoMa, the heart of San Francisco’s technology economy. There, our team is hard at work on the development of a 270-unit, purpose-built 16-story coliving highrise called Starcity Minna. Our development strategy for this centrally-located site is driven by a desire to maximise on-site affordability and deliver housing as quickly as possible to those who need it. In an effort to circumvent San Francisco’s notoriously arduous and risky approval process, our team employed a new entitlements strategy made possible at the state level (Senate Bill 35), which guarantees a 6-month by-right approval process in exchange for setting aside 50% of a project’s units at deed-restricted below-market rate rents. Whereas San Francisco’s own inclusionary process requires that large projects set aside approximately 20% of units as affordable (the highest percentage in the country), our development will greatly exceed that requirement.

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Similar to Starcity Tenderloin, each floor of Starcity Minna will house purpose-built coliving units conforming to San Francisco’s Group Housing code, and they will all share access to a centrally-located shared amenity space with a chef’s style kitchen, media lounge and dining area on every floor. Affordable rents at Starcity Minna will start as low as approximately $800, a far cry from the median 1-bedroom market rent of nearly $3,000 (even during the pandemic). Market- rate units will be offered at a 20-30% discount from Class A Studios in the neighbourhood.

Starcity’s R&D team is honing in on innovative construction technologies that will drive down the development cost of Starcity Minna by a significant degree. The highly replicable nature of coliving units lends itself to prefabricated modular technology, and our R&D team - led by former engineers at Tesla, SpaceX and Schneider Electric - is devising proprietary building solutions that will introduce novel construction approaches in a market that is starved for cost-effective and sustainable housing delivery methods. These efforts centre around the design of a Starcity-specific housing module: the Star Suite, scalable and replicable across multiple properties and markets, and aimed at reducing costly on-site construction costs and structural requirements. As the team and development partners are both finalised,Starcity Minna will look to break ground in late 2021.

About an hour south of San Francisco is San Jose, the original capital of Silicon Valley and an equally expensive market for young renters. Downtown San Jose is undergoing an unprecedented transformation into a true 24-7 live/work/play neighbourhood, as tech giants such as Google and Adobe lay the groundwork for multi-block walkable campuses, and renters seeking a more urban and mobile lifestyle are increasingly finding new options.

In 2019, Starcity acquired a development site in Downtown San Jose with the intent of delivering a world class coliving project, befitting of the innovation made famous by its Silicon Valley neighbours.

The property Starcity acquired was previously entitled for a multifamily highrise, which was set to include approximately 302 traditional apartments. In order to A) bring housing costs down for renters and B) deliver a one-of-a-kind coliving offering that realised the full potential of the site, Starcity redesigned the building interior to a purpose-built format. Each floor of Starcity San Jose would have 45-50 purpose-built individual furnished units, most with their own private en-suite bath. Each floor would also include more than 4,000 SF of central shared amenity spaces, complete with multiple kitchen, dining and lounge spaces, a demonstration cooking area and a double height indoor and outdoor lounge that links every 2 floors with a communicating stairwell. This will create unique vertical neighbourhoods within the building and scale up the optimal private-to-shared space ratios that were honed in on in earlier Starcity properties.

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This Starcity design scheme is “Affordable by Design,” meaning that while Starcity’s units would not be set aside at deed-restricted below market rate levels, market rate rents in the project were anticipated to land below 110% of Area Median Income, an enviable price point that typically is only realised through subsidised affordable housing projects. However, the City of San Jose at the time did not have a planning use that Starcity’s scheme neatly fit, primarily due to the smaller anticipated size of the living units, and the fact that they did not contain individual kitchens for private use. As a result, the City of San Jose sought out to establish a new enumerated zoning use, specifically to encourage coliving projects in Downtown San Jose. When asked about the potential of coliving to address San Jose’s housing crisis, Mayor Sam Liccardo said:

“We struggle so greatly just to get a shovel in the ground to get housing in the city, because construction costs are so high right now ... the fact that the developer had found an approach that could get housing built was a good enough signal to me that we should get any obstacles out of the way.”

Our team worked hand in hand with leadership in San Jose’s Department of Planning, Building, and Code Enforcement to set new guidelines for the Coliving Zoning Use that were rigorous but flexible enough to encourage myriad forms of the coliving model. Considerations were given to room sizing, amount of common space dedicated per resident, minimum parking ratios and ratios of users for areas such as common kitchens. San Jose City Council approved the new Coliving Zoning Use unanimously in February 2019, and Starcity’s coliving scheme was approved at a Director’s Hearing in May 2019. With full entitlements now granted, Starcity is working to bring in capital partners to help deliver this large and transformative coliving project.

Beyond the Bay Area, Starcity is actively engaged on other major projects led by our development partners in major domestic and international markets. With our experience navigating complex development and entitlement challenges, as well as our growing track record of operating best-in-class coliving assets, we are able to lend a unique insight to local developers who are seeking to introduce coliving to their markets. More and more, developers are considering a variety of housing offerings under one roof to diversify the unit mix and reduce any perceived risk of the asset. As an example, an approximately 225-unit development in the Hancock Park neighborhood of Los Angeles will contain coliving units in a 4- or 5-Bedroom rent-by-the- bed format, as well as traditional Studios, 1-Bedrooms and 2-Bedrooms. Residents of the coliving units may over time graduate into their own apartments without ever having to leave a building they have grown comfortable with. By operating the entire building, Starcity will be able to leverage significant economies of scale and increase the stickiness of traditional renters as well, who will share equal access to a great suite of amenities and will be exposed to our team’s socially-oriented event programming and user-facing app.

Similar efforts are underway for a mixed-use multifamily and coliving highrise in the highly popular River North neighbourhood of Chicago, where one and a half floors of the building will be dedicated to amenities. Designing large-scale projects like these during the COVID-19 pandemic has also challenged our team to reprioritise space for what may be in greatest demand in the future: large coworking space with shared desks, private banquets, meeting rooms, and telephone rooms, which are emerging as must-haves for future large-scale projects.

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2020 was also notable as the year Starcity expanded its footprint internationally. Starcity entered one of Europe’s largest and highest cost-of-living markets - Barcelona - with incredible assets in the city’s most historic and desirable neighbourhood, which have been retrofitted for coliving operations while maintaining the unique art nouveau character of the buildings. This expansion did present some unique challenges, including a general lack of regulation on the operations of a rent-by-the- bedroom model. Barcelona’s regulations lack clear direction on furnished rentals with leases exceeding 1 month and are also silent on construction code requirements for a rent-by-the-bedroom offering. On the capital side, lenders historically have considered furnished multi-family a short to mid-term use, while not taking into account the revenue premium realised from the rent-by-the bedroom model. As we navigate these barriers, our team is focused on increasing our presence Western Europe, entering the most populous and cost-prohibitive markets that are receptive to high- density and socially-oriented housing.

As noted above, Starcity rounded out 2020 with its acquisition of coliving operator Ollie, whose deep experience operating complex Class A assets in coastal markets will further strengthen our team’s focus on delivering the best community-oriented assets and maintaining a global mindset for growth. Heading into 2021, we have never been more encouraged about the potential of coliving. With coliving business fundamentals holding sound through the pandemic thus far, and as more and more markets welcome coliving at scale, our team feels well-poised to introduce innovative and affordable-by-design housing solutions to serve middle-income renters throughout the world. With societies confronting a two-headed beast of economic recession and a global pandemic, the need for an accessible and welcoming place to call home has never been more urgent. We’re ready for the challenge, and excited to make a positive impact on urban renters everywhere.