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Business Observer Friday, Feb. 5, 2021 3 weeks ago

Company introduces co-living to region

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There’s a new type of living that’s come to St. Petersburg: co-living. A local business, after some tweaks and regulatory-based shifts, thinks it’s got the right model to scale quickly.
by: Elizabeth Djinis Contributor

From the outside, the two-story house on the side of a busy street could be just another quaint apartment building in a city with hundreds of them. 

On the inside, it more closely resembles a homey college dorm — albeit a beautifully designed and renovated one. House members float in and out of the shared kitchen as doors open and shut, creating a sense of constant motion and community. It’s the antithesis of many renters’ lives — slamming the door shut at the end of the workday and not opening it again until leaving the next morning. 

Despite the dorm-like ambience, the people who live in this house aren’t college students. They range in age from their mid-twenties to early forties. And in addition to an address, many of them share something else important in common: before they came here, they were looking for something a little different.

That different thing is co-living, an experience best defined by what it isn’t. Co-living is not quite living in an apartment with many roommates, and it’s not quite a hostel. It exists somewhere between those two extremes. What makes it different is its low cost, relative flexibility and communal atmosphere. 

‘This is something that’s needed in every community in America. Now that we’ve got the business model established, we’ve worked out all the kinks and it’s ready to scale. And we could scale very quickly.’ Mark Hunter, Docked Living

While co-living has been around in Europe and dense U.S. cities for several years, St. Petersburg-based Docked Living, founded by entrepreneurs Mark Hunter and Kate Berlin, is something of an area pioneer in co-living. Docked Living opened its first co-living space in St. Petersburg in 2019. It’s since expanded to four properties, with one newly launched Jan. 1 and two more slated to open in 2021.

While the niche real estate segment has attracted a diverse clientele, it’s also run into some pandemic-led trouble. Notably, 10 U.S. affiliates of Quarters, the co-living brand of Berlin-based Medici Living Group, filed for bankruptcy Jan. 15. The Chapter 7 filing, in which a company can cease operations and liquidate assets, comes less than two years after Quarters raised $300 million to launch in the U.S., where it opened co-living spaces in eight buildings spread through New York City, Philadelphia, Chicago and Washington, D.C. Those spaces are now closed.

But the need persists.

“People are starved for connection and sense of community,” Berlin says. “Co-living provides that. With being able to work remotely, especially during the pandemic, it allows people the chance to travel and see other places within the United States they wouldn’t normally be able to.”

In total, all four Docked Living spaces house about 40 residents, or members, as they call their tenants. And despite COVID-19, the properties are at 100% capacity. Membership prices range from $550 to $950 a month, a price that includes a furnished room with a private bathroom, a monthly cleaning service, utilities, electric and Wi-Fi.

Docked Living residents share a kitchen but have their own bathrooms. They undergo credit checks and background checks before being accepted. Once admitted, they sign on to be a member rather than a tenant. Memberships last for 12 months, but members can leave anytime throughout their lease term with a 90-day notice. 

The co-owners of Docked Living see their work as preaching the gospel of co-living to St. Petersburg. But they won’t be satisfied with simply keeping it local. They want to expand their efforts all over Florida. 

Overcome obstacles

Docked Living started after a handful of experiments, as co-founder Mark Hunter puts it. 

Hunter, 39, came to St. Petersburg in 2004 from Chicago to study at a local center focused on Vedanta philosophy, a variation of the Hindu philosophy. An unusual mix of a philosopher-cum-businessman, he also started a private equity fund in Tampa, KLH Capital, which manages some $500,000.

Docked Living has made significant financial investments in its properties — as of now, it has no outside investors. By one example, Docked Living bought one of its properties, on First Avenue North in St. Petersburg, for $280,000 in August, according to Pinellas County property records. That building is a 2,515-square-foot, two-story duplex built in 1925, records show.

At first, Hunter and the Docked Living team wanted to change public policy to make inroads in co-living in St Pete. They thought that was the most effective approach. But they kept running into obstacles and red tape from the government.

“Co-living is something the city has never seen before,” Hunter says. “And because it’s new and unusual, they tend to say ‘No, no, no’ instead of saying, ‘this is great. This is in line with affordable housing.’” 

Hunter points to a recent example: he bought a large piece of land near Tropicana Field and intended to build affordable housing “in perpetuity” there, under the co-living model. Docked Living proposed at least 30 designs to the city, he says, with innovative ideas like a net-zero building, a car-free community and communal resources. He envisioned residents sharing kitchens and outdoor spaces and even cars. But they couldn’t get the city to agree to any of their proposals. 

“After years and years of trying to get something approved, we had to decide that we were never going to get something done in St. Pete,” Hunter says. 

He decided to sell the land, which was 10 lots combined, Berlin says, to a developer for $1.65 million. That developer plans luxury condos there, and, Hunter predicts, will get permits from the city — he snaps his fingers — “like this.”

The challenge lies in zoning. Even though the lot Hunter purchased was zoned for multifamily housing, the designs Docked Living floated were “unusual.”

“It doesn’t look like a typical two-bedroom or three-bedroom apartment,” he says. “They want it to look like something they’ve seen before.” 

That’s not exactly how the city sees it. St. Petersburg zoning official Jennifer Bryla recalls the project Hunter referred to, and says the plan for that community was to be a “dormitory.” It was rejected because there was no educational facility involved and the city doesn’t allow “rooming houses.”

Bryla refers to the co-living spaces — with shared kitchens but separate bedrooms and bathrooms — as “rooming houses.” She adds that the co-living spaces Docked Living currently manage go against certain fire codes. By definition, Bryla says, a unit is a space with separate cooking and lavatory facilities.

The conversation is ongoing, Bryla says, and  it could lead to policy changes. “I want us to come to some conclusion, and it might be a solution to some affordable housing issues,” she says. “It just depends on where and how it’s handled.”

Mark Wemple. Mark Hunter co-founded  St. Petersburg-based Docked Living in 2019.

Hunter and Berlin, 32, were able to find a strategy that worked within the confines of the city’s regulations. They decided on co-living spaces with a range of six to 10 people that operate much like small apartment buildings with more shared spaces and more affordability. They have a template now for all of their future developments.

Hunter declines to offer annual revenue figures for the firm so far, but says the company expects 10 cents in return for every dollar spent. At the highest membership range, $950 a month, it would take about 85-90 members to surpass $1 million in annual revenue. The company’s mission, says Hunter, is to also look at addressing problems like affordable housing and building a community, not just the financials. “If we can be the lowest price point in the town, we feel very good that we’re providing a service for folks,” Hunter says. 

The price of rent also comes with an unusual service: an “on-site mom,” as Berlin semi-jokingly calls herself. Berlin does a little bit of everything — she designs the co-living spaces, making them each feel unique and inviting, and she also manages the activities and goings-on of each house. She knows each resident by name, even if they’ve only been there for a week. 

That friendliness is by design. One of Docked Living’s explicit goals is to stave off social alienation and loneliness in young people by creating an environment where they can safely and comfortably interact.

Now that they have successfully created four properties, with two more on the way, both Berlin and Hunter see this as something that can grow far outside of the Tampa Bay area. Hunter can envision building as many as 200 co-living spaces a year, pointing to Jacksonville, Fort Myers and Gainesville as possible locations.

“This is something that’s needed in every community in America,” Hunter says. “Now that we’ve got the business model established, we’ve worked out all the kinks and it’s ready to scale. And we could scale very quickly.” 

Nomadic existence

One seemingly obvious challenge — living with strangers in close quarters in a global pandemic — has instead been a boost: Docked Living, say the founders, has seen an uptick in members because of how many people can work remotely now.  

For some of the house members, Berlin says, co-living has been a “saving grace.” Being isolated during a pandemic can be depressing and lonely. Meeting new people while keeping to reasonable health guidelines makes COVID-19 more palatable. 

Docked Living posts their listings on Facebook Marketplace, but otherwise, much of it is word of mouth. Direct hits to their website produce a third of their inquiries.

And there’s a science to choosing the right people as housemates. Berlin says they’ve learned from past experience that screening is necessary. Anyone who is interested gets a Zoom call where the founders can ask questions like: What are your expectations? How can we match that? Are we a good fit? 

It’s a cross between looking for a roommate and a partner. And that process is in many ways the secret sauce of what makes Docked Living’s properties work.

“Once something is rent-ready, you have to have someone like Kate who is really good at the community,” Hunter says. “One or two individuals who have the wrong attitude can spoil the experience.” 

 

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