By Herbert Lash
NEW YORK (Reuters) - Medici Living Group said on Tuesday the family office of German real estate investor Ralph Winter has agreed to invest $300 million over three years to develop 1,300 U.S. units of Medici's Quarters brand of shared housing for young professionals.
The initiative, which Medici Living said will make Quarters one of the top U.S. shared-living operators, is the largest single investment in U.S. "co-living," the Berlin-based company said in a statement.
Co-living has gained acceptance as young people who have been priced out of housing markets in major cities drive demand for tiny apartments that are grouped around shared dining areas, lounges, workspaces, laundry rooms and gyms.
Brokerage Cushman & Wakefield identified co-living, along with coworking and "co-everything", as its top trend to watch in commercial real estate in 2019, after U.S. recession indicators.
Corestate Capital Holding SA (DE:CCAG), a company Winter founded, agreed in December to invest 1 billion euro ($1.14 billion) to add 6,000 rooms over the next three to five years to Medici Living's European portfolio.
Quarters already operates two sites in New York and one in Chicago. With the money from Winter's 5W family office investment vehicle, Medici Living will soon announce deals in three other U.S. cities, German entrepreneur Gunther Schmidt, who founded Medici Living in 2012, told Reuters.
He did not name the cities but said Medici Living plans to expand to Seattle, San Francisco, Los Angeles and San Diego on the West Coast; Washington, Philadelphia and Boston on the East Coast, and Austin, Texas and Denver.
Quarters previously signed 10-year leases with two five-year options but now will offer developers a way to exit their projects as many of the buyers of those assets are not familiar with shared housing, he said.
"As co-living is rather new, for them it's an unknown to take us in as a tenant," said Schmidt, who co-founded feedback management company eKomi a decade ago when he was 24.
"We broadened the pool of developers who can work with us because they're not limited by who needs an exit," he said.
Sites typically will have 100 to 300 rooms, while New York will be larger at 500 rooms or more, he said.
The New York City government launched ShareNYC in November, which aims to expand affordable housing and set the standard for shared living.