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Co-living spaces

Outside the Box Thinking: San Jose Tackles Affordable Housing Crisis

By Anthony SanFilippo
November 2019

Finding affordable housing in most major cities in the United States is becoming increasingly harder by the day.

Especially in San Jose, where being in the heart of Silicon Valley has caused home prices to skyrocket. Couple that with a housing shortage and, well, finding a place to live in San Jose has become next to impossible for middle income earners.

The good news is, San Jose government isn’t sitting on its laurels, as it tries to tackle this housing crisis that is punishing to many workforce individuals like teachers, nurses, and first responders.

The Bay Area’s largest city has turned to creating co-living environments. Taking a page from New York, which is the most established co-living city in the country with more than 1,100 existing units and another 1,600-plus in the pipeline according to Bisnow, San Jose is incorporating some progressive ideas to address this affordability issue.

While New York’s Department of Housing Preservation and Development launched ShareNYC, a program that provides public funding for the development of affordable, co-living environments, San Jose has gone a step further.

In the past year, it has completely re-written its zoning code to include co-living as a use within the code.

It became the first city in the country to do that, and others are sure to follow suit as they see the influx of co-living development in San Jose.

New Multifamily Complex

The jewel of that development is a co-living high rise being built in the city that will be a 302-unit, 803-bed multifamily complex slated to break ground before the end of the year. This 18-story building, being developed by the California-based company StarCity, will be the largest co-living development in the world.

However, with San Jose changing the zoning code, there’s a good bet that this project will only hold that title for a short period of time. That’s because having its own zoning code for co-living, San Jose has basically put up a flashing neon sign to developers across the country that says, “Come build here.”

Not to mention, co-living is a trend that is starting to gain some steam in many major cities around the country. StarCity already has smaller developments in Los Angeles and San Francisco, and New York remains the bell cow for this concept.

While there is a unit count, these co-living spaces are measure more on the number of available beds. Co-living spaces are similar to college dormitories in the sense that they offer private living spaces, or bedrooms, with shared living rooms, kitchens, laundry facilities, etc.

“The growth coming to San Jose will attract a slew of younger tech workers, which is ideal for a co-living environment.”

The new development in San Jose is close to public transit and is located conveniently near big employers who are either already in San Jose or in the process of re-locating there.

For example, Google has purchased more than $300 million in property in the city, most of it near Diridon Station where the tech giant has plans for a transit-focused village.

According to San Jose Spotlight, the Jay Paul Co., a Northern California developer has already committed nearly $700 million in the city while Urban Community, a San Jose-area based developer is planning to spend billions in this market, according to Bisnow.

With all that additional business space development on tap for San Jose in the roaring ‘20s, the city is going to need even more affordable housing, which makes the notion of co-living all the more practical.

25,000 new homes

The San Jose City Council has set a target of 25,000 new homes in the city by 2023 and an ambitious 120,000 by 2040.

With the costs required for more traditional development, those goals seem a little far-fetched. But, once you mix in the concept of co-living, suddenly they seem attainable.

Rents for the new StarCity development are expected to star in the low $2,000s, which could be as much as 50% cheaper than the typical studio apartment in downtown San Jose.

The growth coming to San Jose will attract a slew of younger tech workers, which is ideal for a co-living environment.

According to a report from JLL, investment in co-living has increased by 210 percent globally since 2015. A majority of that is new development – roughly 60 percent – rather than converting existing space into co-living use.

StarCity has made it known they are looking at other potential sites in San Jose and other major co-living companies are exploring options there as well. This could make San Jose the model for easing the affordable housing crunch nationwide.


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