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Group Effort

Lamar Anderson | October 5, 2017 | Story News and Features National

Despite having grown up in suburban Palo Alto, Jon Dishotsky got used to communal living from a young age. “My father, a Stanford professor, decided to run an experiment on the family: A lot of students would live with us,” he recalls.

That experience planted the seed for Starcity, a startup that converts empty commercial buildings into high-end group housing. But the company—a graduate of Y Combinator’s 2016 summer program—isn’t just another hacker house concept. Instead, it’s aimed at all kinds of workers who find themselves priced out of studios or just unwilling to pack a bunch of people into a two-bedroom to make ends meet.

At the two Starcity buildings now open in San Francisco, the rent per person comes in at about $1,600 per month for units of 260 square feet or less. That’s 37 percent lower than the median list price for a studio, according to Zillow, and it includes utilities, Wi-Fi and a cleaning service. Residents share common areas like kitchens, living rooms and outdoor space, and can opt into activities like Sunday suppers and movie nights. Starcity cofounders Mo Sakrani, Jesse Suarez, Josh Lehman and Dishotsky (who is CEO) are looking to adapt the model for the Peninsula, where they hope to open several projects in 2019.

Why convert commercial buildings? “We want to net-add new residential stock,” explains Dishotsky, a former commercial real estate broker. It’s an attempt to counter the region’s bias for building commercial space instead of homes, which don’t fill the municipal coffers the way taxes on businesses do. The company looks for underutilized properties— perhaps garages permitted for mixed use or hotels that aren’t doing well—that can be rehabbed into well-designed dwellings for renters.

“What people forget is that real estate is one of the last businesses to exist that hasn’t been reimagined,” Dishotsky says. “When you think of a go-to brand for housing, you’re like, ‘Craigslist?’ That’s a big opportunity for somebody, and that’s what we’re after.”

Originally published in the September/October issue of
Silicon Valley

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