Rethinking Real Estate by Dror Poleg

Author:Dror Poleg
Language: eng
Format: epub
ISBN: 9783030134464
Publisher: Springer International Publishing

Apartments

Bedrooms

Conventional (floors 17–42)

297

367

Coliving (floors 2–16)

169

422

Building total

466

789

Ollie’s role at Alta is similar to that played by hotel brands. The floors operated by the company have been laid out according to unique specifications made by Ollie’s in-house design and architecture teams. Ollie handled the way units were furnished and stocked, down to the paper towel holders and kitchenware. Ollie provides weekly housekeeping with linen and tower service to all the coliving units and replenishes the supply of toilet paper, dish soap, body wash, conditioner, and shampoo.

All Ollie residents have access to Alta’s amenity network including two rooftop lounges, a coworking space, gym, pool, yoga room, and golf simulator. Ollie conducts regular community events, both in and out of the building. Ollie also provides a digital layer, including an app that allows residents to submit maintenance requests, schedule cleanings, book building amenities, receive package notifications, and keep track of the building’s busy schedule of community activities.

On the distribution side, Ollie’s website generates about 80% of the leads to the building’s coliving units, according to CEO Chris Bledsoe.ccxcix Ollie also operates a website that helps residents identify an ideal roommate. The app, called Bedvetter, provides each member with a questionnaire and connects people based on their move-in date, budget, lifestyle, and personal habits. As of June 2019, Bedvetter helped “create” over 200 shared households. Once matched, roommates sign a standardized lease agreement. Other roommate matching solutions such as Nooklyn and Roomi have also grown in popularity in recent years, but Ollie is the first to integrate the process into a comprehensive residential offering.

Ollie’s involvement helped Alta improved the project’s overall financial results. Based on 90% of the coliving units leased by June 2019, the areas of the building operated by Ollie achieved rental premium of about 45% compared to the building’s traditional units. This translates into a 30% increase in net operating income (NOI) per square foot, net of Ollie’s incremental expenses and management fees.

Ollie’s typical arrangement with property owners is also reminiscent of hotel franchisors. The company’s management fees are based on a percentage of rent, with bonuses based on pre-agreed benchmarks, and additional fees for Ollie’s tech services and lead generation. In 2019, Alta’s developer managed to replace the building’s construction loan with permanent financing from Société Générale and Deutsche Pfandbriefbank, reflecting the confidence of traditional lenders in this new coliving operating model for residential buildings.ccc

Dozens of coliving projects by operators such as Ollie, Common Living, Medici Living, and Starcity have proved that the model can deliver superior financial results. But many in the industry still question the overall potential of the coliving market and see it as a niche product. We believe that demand for coliving is driven by demographic and technological changes that impact a significant share of the population. More importantly, it would be a mistake to assume that coliving’s operating model applies only to the customers it currently serves. The model’s evolution points to a bigger shift in the way all residential assets are operated. Let’s see how.

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