Does the new communal living trend actually make NYC more affordable?

By Lucy Cohen Blatter | April 20, 2015 - 8:59AM

New York has always been a city of roommates — how else are people (recent college grads, for instance) supposed to pay these sky-high rents? But there's a new trend popping up among young professionals that puts a twist on the traditional roommate experience.

As the Daily News recently reported, it's a model similar to community-minded office environments like WeWork (which is said to be planning to extend into the residential arena): A company (or single tenant) rents a large, multi-room apartment, furnishes the communal spaces and then subleases individual, unfurnished bedrooms out to others. In general, only one person is on the lease and those renting out the bedrooms are not. There's also always a minimum lease time, since it's illegal to rent a place for less than 30 days in NYC.

Campus, a San Francisco-based company (which calls itself a "network of communities"), has recently entered this space in the NYC market. Among the bedrooms that are available are a midtown room that's about 150 square feet asking $1,900 and an 80-square-foot room on the Upper East Side for $1,480.

Rent a room in an apartment in this Upper East Side building for $1,480. Floorplan below.

Catering to young professionals

Neeta Mulgaokar, an agent with Mirador Real Estate, recently rented one of these properties. She says for some, a model like Campus' is a way to find a place without making a long-term commitment and to meet people in a new city. And since the landlords and the company check out tenants first, at least financially, it can be safer than a Craigslist share.

"The landlord I worked with said he wanted to vet every new person that comes in despite any screening process the company would do, and they were going to run credit on each one," she says.

Eventually, tenants may be able to have a membership that allows them to move around to different apartments within the same building or belonging to the same landlord; at least that's what Rehan "Rey" Kapadia, an agent with Bond New York, predicts. "To make it really successful, they'd have to design a mobile app to make sure people could collaborate easily. "

But is it legal?

While there could be some legal hurdles to overcome, a landlord's approval is the first — and biggest — one.

"The first line you look at is whether the lease permits it," says real estate attorney Steve Wagner of Wagner Berkow LLP.

If so, you might still have to deal with some issues. Technically, according to the Multiple Dwelling Law, each person living in an apartment must have a minimum of 80 square feet (though the common area can count toward the 80 square feet). There are also some restrictions as to the number of non-related people who can live together, but zoning laws differ depending on when a building was built, and usually they aren't enforced as long as the landlord has okayed a rental.

Mulgaokar says the landlord put a rider in the lease for the place she handled saying that it wasn't a hotel — avoiding the problems Airbnb has had in the city — and explicitly stated that the minimum sublease term was three months.

How affordable is it really?

Assuming it's all legally kosher, it's unclear whether this is actually a solution to the city's affordability crisis. Are tenants getting flexibility and reasonable rent or are they actually getting less space for more money?

"The housing crisis hurts certain people more than others — low-income people, people with handicaps and people who have been incarcerated," says Jaron Benjamin of Housing Works, which provides housing and support services to New Yorkers with HIV and AIDS. "This doesn't do anything to help with affordable housing stock for those people. It's also not a long-term solution."

John Infranca, who co-authored a white paper on micro apartments for NYU's Furman Center for Real Estate and Urban Policy, says that these kinds of living situations are not quite as effective as micro-apartments in creating affordable housing. "For micro-apartments to have a positive affect on affordable housing, it's about adding housing and creating additional supply to help ease demand." He says micro-apartments are for individual renters, leaving larger apartments open for families. If companies like Campus split up these large apartments to rent out to one person apiece, "it bids up the price for two or three-room units," he says.

That said, Infranca says he sees why this kind of housing situation is attractive for young New Yorkers who may not be able to qualify for a rental on their own (if they don't make 40 times the monthly rent) or can't find a guarantor who makes 80 times the monthly rent.

Sarah Watson, deputy director of the Citizens Housing and Planning Council, a policy research organization in the city that focusing on housing,planning, and economic development, sees the need, too. "The idea of just being able to rent the space you need is definitely an option that should be in the marketplace," she says. "There should be more safe, diverse legal options available for people, since hundreds of thousands of people do this kind of thing now without regulation."

Wagner predicts in the future, rather than being deemed illegal, there will be more regulation for these kinds of situations. "Obviously people need this and want it," he says.

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