With housing costs growing ever-larger in cities like San Francisco and New York, one company is finding out just how much people are willing to get squeezed.
For $1,200 a month, the millennial-focused startup PodShare is offering a bunk bed in a shared “co-living” space. It’s being pointed to by some as a new symbol of the affordable housing crisis vexing many urban areas in the U.S.
“We go into these expensive cities and we offer a 50% discount by densifying existing buildings,” PodShare’s CEO, Elvina Beck, told Yahoo Finance’s “The Ticker.” “We’re not saying this is forever housing. We’re just saying there’s nothing out there right now which is like a ‘sampler plate’ for neighborhoods, except for PodShare.”
A “byproduct” of skyrocketing rents
PodShare currently has six locations—five in the Los Angeles area and one in San Francisco—with plans to expand. It chooses prime spots for its “hubs” where housing costs have reached stratospheric heights, such as L.A.’s Venice Beach or Hollywood.
“Even though your pod is 50 square feet, you actually have 2,000 square feet in the building and up to six locations to jump around in,” Beck says. “So you get to experience neighborhoods and meet roommates face-to-face versus on the internet.”
Increasing rent pressures, especially on millennials, aren’t likely to ease any time soon. Apartment demand is at a 5-year high—spiking 11% in the second quarter of the year compared to 2018, according to real estate analytics firm RealPage. That’s pushed average rents up by 3% nationally to $1,390 per month. In cities like San Francisco, it’s often multiple times higher.
Rather than fueling the affordable housing crunch, PodShare sees itself as a natural byproduct of it. “We want to provide housing that’s flexible [and] non-committal because that’s what the millennials want,” Beck argues. “It’s something that gives you options and doesn’t lock you into an annual lease in a new city where you don’t yet have a job.”
With millennials getting increasingly desperate to make ends meet—adopting everything from RVs to boats as full-time homes—PodShare is hoping it can convince at least some of them to embrace such privacy-free living.
Nick Robertson is a senior producer at Yahoo Finance.