San Francisco housing startup Starcity is expanding to Los Angeles

Starcity is taking over a
residential building in Los Angeles that was once used for
housing interns at Snapchat parent company Snap
Inc.
Starcity

• Starcity, a startup that develops communal living, or
  “co-living,” spaces in the San Francisco Bay Area, has
  announced it’s expanding to Los Angeles in September.
• 29 Navy Street will offer 31 units of housing in Venice
  Beach. 
• Starcity believes its unconventional housing stock
  could provide some relief from the Los Angeles housing
  crunch.

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Starcity, a startup that buys
old hotels, retail buildings, and parking garages and
turns them into shared living spaces for San Francisco’s
middle class, is opening its first residential building outside
the Bay Area. And, no surprise, it’s planting roots in another
major tech hub.

The company plans to open its first communal living, or
“co-living,” space in Los Angeles later this month. 29 Navy
Street will offer 31 units of housing in Venice Beach, a
buzzing beach town in LA that’s known for its bohemian spirit and
rising number of tech startups.

The brick-and-timber building
was formerly leased by Snapchat parent company Snap Inc. and
used for intern housing. The app company began snapping up real
estate in Venice Beach in 2013, when Snap CEO Evan Spiegel
left Palo Alto and launched Snapchat out of Venice Beach,

hoping to escape Silicon Valley culture.

Spiegel is not alone in making the move.

People are leaving San Francisco in droves

The San Francisco Bay Area is on the brink of an exodus as
middle-income residents flee the region, where a low supply of
homes and high demand have caused the cost of living to
soar. Others
say they’re seeking respite from the “groupthink” in Silicon
Valley. 

Those housing market refugees
often settle in places like Seattle, Denver, and Los Angeles
— cities where they can continue to work in the tech sector and
live within their means.

Read more: San
Francisco’s housing market is so out of control, 60% of tech
workers say they can’t afford homes

Los Angeles is becoming one of the more alluring destinations for
entrepreneurs and the
investors who fund their startup dreams. Hot companies like
scooter-sharing firm Bird, pet-sitting platform Wag, and men’s
grooming delivery service Dollar Shave Club have all
opened headquarters near the city’s so-called “Silicon Beach,”
and new venture capital funds are sprouting up at a dizzying
pace.

Starcity is aimed at city dwellers who can’t afford city
prices

Venice Beach is a natural fit for Starcity’s first expansion
beyond the San Francisco Bay Area, though the company’s cofounder
and CEO Jon Dishotsky said that tech workers aren’t its
target customers.

Starcity’s cofounders.
Starcity

Starcity caters to a specific
demographic — middle-class earners who don’t qualify
for government subsidies but still can’t afford San Francisco’s
sky-high prices. That group ends up being mostly non-tech
workers, including restaurant staff, teachers, and
artists.

“LA is going through a lot of the same things that the San
Francisco Bay Area is going through — this question around
affordability and access to the best cities,” Dishotsky told
Business Insider.

“People are just trying to make ends meet,” he added.

Each resident of a Starcity building has a fully furnished
private bedroom and private or shared bathroom, with access to
shared living spaces like kitchens, rooftop lounges, and TV
areas. Leases are designed with flexible terms, and the monthly
rent includes utilities, cleaning service, and shared supplies to
reduce hassle.

Most rooms cost between $2,000 and $2,400 a month, which is
significantly more affordable than San Francisco’s median
one-bedroom rent of $3,570
and Venice Beach’s typical $3,400.

A bedroom at Starcity’s
new Venice Beach location.
Starcity

The expansion continues

Dishotsky said he’s been eyeing spaces in Los Angeles for a year
now. Starcity is set apart from other companies in the
“co-living” category because it buys property, instead of leasing
it. This ownership gives the company the ability to add more
units — increasing density “to a point where it’s still
comfortable for the individual,” Dishotsky said — and offer
residents lower prices.

The company owns and manages four residential communities in the
San Francisco Bay Area, with nine more communities under
development. It’s focused on converting underutilized
multi-family, hotel, and office buildings.

“In almost every situation, we’re trying to build new supply
versus cannibalizing existing low-income or market-rate
housing,” Dishotsky said.

Starcity has already doubled down on its play for the Los Angeles
market. In addition to opening two offices near Venice Beach,
Dishotsky hinted at a second residence in Los Angeles that will
have over 100 units, making it the largest building in Starcity’s
portfolio.