Cities Lack Family Apartments. Developer of Adult Dorms Has an Answer.

Kevin Hagen for The Wall Street Journal

A co-living company whose dormlike accommodations have become popular with single 20-somethings has a new customer in mind: families.

Common, which rents out furnished rooms in shared, serviced apartments, is teaming with New York real-estate developer Tishman Speyer to launch this new product on Tuesday.

Under the new brand Kin, buildings will feature playrooms, family-size units and on-demand child care through an internal mobile app that also helps connect families looking to share nannies and babysitters.

Common and Tishman Speyer are testing out those offerings at an existing project, Jackson Park in Long Island City, with plans to announce new developments in other locales in the coming months.

The partners see this as an opportunity to help address a shortage of family-size apartments in many major U.S. cities, where developers have overwhelmingly built studios and one-bedrooms targeted to single 20-somethings.

The partners see the project as a way to help address a shortage of family-size apartments in many major U.S. cities. Large common playrooms are meant to compensate for the compactness of the apartments.

Kevin Hagen for The Wall Street Journal

“People are choosing to raise families in big cities more than ever,” said Rob Speyer, president and chief executive at Tishman Speyer. “It’s very difficult to find housing that’s tailored to that.”

Common pioneered the co-living concept, but since then it has become a crowded space with a handful of well-funded competitors. All are racing to see who can most quickly overcome hurdles, such as finding developers and banks willing to gamble on the unconventional layouts, and finding a way to shrink floor plans without alienating customers.

Brad Hargreaves, founder and chief executive at Common, said the idea for the product grew out of his own experience trying to find child care in the city when his son was born in 2015.

“When [my first son] was about to be born we started looking for child-care options, and we really struggled to find anything that was affordable and high-quality,” he said.

The Kin venture also provides a hedge for Common when its clientele are aging out of their 20s and potentially out of Common’s core product.

“People are choosing to raise families in big cities more than ever,” said Rob Speyer, president and chief executive at Tishman Speyer. “It’s very difficult to find housing that’s tailored to that.”

Kevin Hagen for The Wall Street Journal

Common was founded four years ago and offers apartments that have tiny bedrooms, shared kitchens and often shared bathrooms. But there are perks, such as regular housekeeping services, organized outings to comedy shows and museums, and subsidies for community events like game nights.

Some analysts have warned that co-living buildings serve a niche demographic and people are much less likely to live there when they become couples or have children.

“There is a large question from a venture-capital side about what these companies are going to look like in 10 years. When the largest cohort that is using co-living, what happens when these people grow up?” said Jeffrey Berman, a general partner at Camber Creek, a real-estate-focused venture-capital firm.

Unlike Common’s co-living product, Kin buildings won’t require families to share kitchens and bathrooms. But Mr. Hargreaves said units will be compact to help make them more affordable, with larger common spaces to compensate.

Developers traditionally build much fewer two- or three-bedroom apartments because they are more expensive and so tend to lease more slowly.

Many analysts also expected millennials to live in cities during their 20s and flee to the suburbs for space and a backyard as they got older. That is happening, but analysts say millennials are willing to rent longer and are more inclined than their parents to stay in the city for at least a few years after having their first child.

Developers have ramped up production of smaller apartments in recent years, according to CoStar Group. Nearly 60% of new units constructed in the 54 largest metros since 2014 have been studio or one-bedroom apartments, according to CoStar, up from about 45% from 2000 to 2013.

A kids bedroom with bunk beds in a model apartment in the Jackson Park development.

Kevin Hagen for The Wall Street Journal

At the same time, the share of apartments with two or more bedrooms has declined to just over 40% since 2014, from about 55% from 2000 to 2013.

Developers say they are building fewer larger units because they don’t see much demand for them, as families are having fewer children and having them later. In 2010 there were nearly a third more children than pets in apartment buildings, according to RealPage Inc. Today that trend has reversed and pets now outnumber children.

Toby Bozzuto, president and chief executive of the Bozzuto Group, a developer and apartment manager, said when he builds large two-bedroom or three-bedroom apartments they are much harder to lease than smaller ones. Moreover, even though the units are expensive, they fetch less per square foot than smaller apartments.

“We have real-life examples where they’re not leasing as well,” he said. In one building in Baltimore, he said, he has leased 95% of the building but has struggled to lease the few larger units.

Common and Tishman Speyer plan to announce new family developments, under the brand Kin, in other locales in the coming months.

Kevin Hagen for The Wall Street Journal

Mr. Hargreaves said he is confident that families aren’t leaving by choice but because of limited child-care and housing options.

“One of the biggest things [families] fear is being forced out of the city into the suburbs,” he said.

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