As housing costs continue to surge across U.S. cities, coliving has emerged as a profitable and sustainable solution for both renters and real estate investors. By providing flexible, affordable housing options, coliving offers investors higher rental yields and lower vacancy rates.
Cities like Austin, St. Petersburg, and Denver are leading this trend, making significant zoning changes to support coliving. Meanwhile, other markets like Phoenix, Atlanta, and Dallas are experiencing organic demand for coliving solutions as housing affordability remains crucial.
With rising regulatory pressures on short-term rental platforms like Airbnb, coliving presents a stable, long-term investment strategy for real estate investors. Let’s explore the zoning reforms and market trends driving the rise of coliving in these cities.
Coliving meets the need for affordable housing
In many U.S. cities, the rapid increase in housing costs has outpaced wage growth, leaving young professionals, students, and gig workers priced out of traditional rentals. Coliving fills this gap by offering affordable, community-oriented living spaces where tenants rent private rooms in shared homes.
For investors, coliving offers the potential for higher returns through room-by-room leasing. This model allows property owners to charge more per square foot than traditional rentals while maintaining low vacancy rates. By partnering with platforms like PadSplit, property owners can easily convert single-family homes into coliving spaces, gaining access to tools for tenant screening, property management, and operations support.
Now, let’s dive into some U.S. cities where zoning reforms are enabling coliving to thrive and others where coliving demand is naturally surging due to population growth and affordability issues.
1. Austin, Texas: zoning reforms encourage affordable coliving solutions
Austin’s rapid rise as a tech hub—driven by companies like Apple, Google, and Tesla—has led to economic expansion and skyrocketing housing prices. From 2000 to 2023, the average home price in Austin jumped from $177,000 to $485,000, pricing many residents out of the market.
In 2024, Austin introduced the HOME amendments, a comprehensive set of reforms aimed at increasing housing density in traditionally single-family zoned areas. These amendments allow up to three units on a single-family property and remove restrictions on the number of unrelated adults who can live together. This change aligns perfectly with coliving models, creating opportunities for developers to build coliving spaces in high-demand areas.
Additionally, the DB90 Density Bonus Program allows developers to construct taller buildings in exchange for contributions to affordable housing. These reforms make it easier for investors to capitalize on room-by-room leasing, giving them access to a growing pool of young professionals and tech workers seeking flexible housing solutions near Austin’s job centers.
2. St. Petersburg, Florida: zoning reforms open doors for coliving
St. Petersburg is emerging as a key market for coliving in Florida, thanks to zoning changes that encourage higher-density housing. Part of the Tampa Bay metro area, St. Petersburg, has long been a cultural destination with more affordable housing than neighboring cities.
In May of 2024, Governor Ron DeSantis signed into law Senate Bill 328, which made key amendments to the Live Local Act that make it easier to build multifamily residential and mixed-use developments. Local governments are now mandated to administratively approve multifamily projects that satisfy affordability criteria. Additionally, parking requirements have been reduced, and restrictions on density and height have been relaxed, paving the way for developers to build coliving spaces that meet the needs of students, young professionals, and gig workers.
St. Petersburg’s favorable regulatory environment, cultural appeal, and proximity to job centers make it ideal for PadSplit’s coliving model. Investors can use this supportive regulatory landscape to develop properties that meet growing demand while benefiting from high rental yields.
3. Denver, Colorado: zoning reforms support high-density coliving
Denver has become a hotspot for young professionals drawn to the city’s booming tech industry and outdoor lifestyle. However, Denver’s rapid growth has driven up housing prices, with the median home value increasing by 200% between 2000 and 2023. This housing crunch has left many residents searching for affordable alternatives to traditional rentals.
In 2024, Denver implemented a series of zoning reforms to increase housing density and create more affordable options. These changes include easing restrictions on ADUs (Accessory Dwelling Units) and allowing more unrelated adults to live together in shared spaces. This directly benefits coliving models, expanding the pool of available rental units and allowing homeowners to add rental units to existing properties.
By encouraging higher-density projects and coliving developments, Denver is poised to see a 10% increase in housing units within three years. This makes Denver an attractive market for investors looking to leverage the city’s growing workforce and consistent demand for affordable housing.
Cities thriving from strong coliving demand
While zoning reforms are making it easier to develop coliving in certain cities, others are seeing a natural increase in demand for coliving solutions due to economic growth and rising housing costs. These markets offer promising opportunities for investors looking to enter the coliving space without the need for specific zoning changes.
1. Phoenix, Arizona: a growing population and rising demand for coliving
Phoenix is one of the fastest-growing cities in the U.S., driven by affordable real estate, a thriving economy, and an inpouring of new residents. With annual population growth rates between 1.2% and 1.5%, Phoenix attracts residents from states like California looking for lower living costs and sunshine.
Phoenix is also a magnet for college students and recent graduates drawn to the city’s affordable housing, outdoor lifestyle, and job opportunities. The presence of major universities like Arizona State University adds to the demand for flexible, affordable living arrangements, making coliving a natural solution for young professionals who want to stay close to the city’s urban core.
For investors, Phoenix offers low-cost entry into a market experiencing strong population growth and demand for affordable housing. With coliving, investors can tap into this demand while providing residents access to shared living spaces that allow them to enjoy Phoenix’s unique outdoor amenities and vibrant social scene.
2. Atlanta, Georgia: a growing coliving hub with a need for affordability
Atlanta is undergoing rapid growth, establishing itself as a tech, entertainment, and logistics epicenter, driving increased housing demand. While the city flourishes in many areas, significant affordability challenges persist.
Nearly 72% of Atlanta households spend over 45% of their income on housing and transportation, and the region is short by an estimated 132,000 affordable rental units, according to the Federal Reserve Bank of Atlanta. As these affordable options diminish, coliving has become an appealing solution for students, young professionals, and individuals seeking flexible living arrangements. Notably, Atlanta is also the birthplace of PadSplit, making it the first U.S. market to adopt the coliving model at scale.
Atlanta’s ongoing need for affordable housing presents an opportunity to develop profitable coliving spaces in high-demand areas, particularly near public transportation options like MARTA.
3. Dallas, Texas: transitioning from short-term to coliving rentals
The Dallas-Fort Worth (DFW) area is one of the most rapidly growing metropolitan areas in the U.S., adding 152,598 residents in 2023 alone. As the region surpasses 8 million people, the need for affordable housing continues to proliferate, especially as tech jobs flood the market.
Dallas passed a ban on most short-term rentals in 2023, but legal challenges have delayed enforcement. While the city waits for the courts to decide, many properties continue to operate under a cloud of uncertainty. With over 3,500 short-term rentals in the city, some operating without proper registration, investors face an unpredictable future. If the courts uphold the ban, thousands of short-term rental operators could be forced out of business.
Amid this uncertainty, coliving offers a stable alternative. PadSplit provides investors with a reliable, long-term solution, focusing on room-by-room leasing and steady tenant demand. Unlike the volatile short-term rental market, PadSplit allows property owners to avoid legal risks and benefit from consistent rental income in a regulated, growing market.
Nationwide trends supporting coliving
As more people transition to a less location-dependent lifestyle due to remote work, investors should consider how coliving compares to long-term rentals. With the flexibility and affordability offered by coliving, it often presents a more appealing option for tenants. Furthermore, many investors are pivoting from traditional long-term rentals to coliving to maximize their income potential.
In fact, PadSplit’s mid-term rentals allow investors to recoup lost Airbnb revenue while earning an average of 33% more revenue than traditional rental models. This strategy not only reduces workload but also leads to an impressive 80% occupancy rate. For struggling rental property owners, PadSplit is an ideal exit strategy, providing a reliable income source in a changing market.
Future outlook: the coliving market’s growth trajectory
Looking beyond current trends, the coliving market is poised for significant growth driven by several key factors. As affordability concerns rise, especially among younger adults and retirees, the demand for coliving options will likely increase. A recent research study on the global coliving market reveals that its value is projected to rise to $10.743 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 27.17% during this forecast period.
Additionally, older adults are increasingly turning to home-sharing arrangements to reduce costs and combat isolation. Some local governments have even initiated programs to guide seniors toward similar living arrangements to alleviate pressure on their city’s housing markets. The evolving demographics and changing attitudes towards communal living further bolster the future potential of the coliving sector.
How can investors enter the coliving market?
Investors interested in entering the coliving space have multiple pathways to consider. One option is acquiring properties such as apartments, duplexes, or single-family homes where demand for affordable housing is high. These properties can then be converted into coliving spaces by reconfiguring layouts to accommodate shared common areas and private bedrooms.
For those looking to streamline the process, coliving home marketplaces offer properties already optimized for communal living, reducing upfront conversion costs. Additionally, partnering with established coliving operators like PadSplit can help investors scale quickly by tapping into their operational expertise and tenant networks.
Whether through property acquisition, conversion, or collaboration with operators, the coliving market presents a flexible entry point for investors seeking to address growing housing needs in downtown and urban areas.
Is coliving the future of urban housing investment?
The national trend toward higher-density housing and affordability is clear. Cities like Austin, St. Petersburg, and Denver are leading the way with progressive zoning reforms that align with PadSplit’s coliving model, while cities like Phoenix, Atlanta, and Dallas are thriving from natural demand for shared living spaces.
For investors, coliving provides an opportunity to secure higher rental yields, lower vacancy rates, and a solution to the growing demand for affordable, flexible housing. As cities continue to adjust their zoning laws, stay ahead of the curve by exploring coliving in these rapidly growing markets.
Interested in learning how coliving can maximize your investment? Explore the PadSplit Earnings Calculator to see how you can optimize your returns.
