The paper reflects on a pilot community-engaged pedagogical approach, developed through a second-year housing design studio at the Department of Architecture, University of Cyprus. Underpinned by the Urban Living Labs (ULLs) methodology, and in particular, a participatory action research approach (PAR), a co-creation framework was designed, implemented and evaluated and its impact on students and on the design outcomes has been assessed. Designed as a meeting place for students, educators, researchers, and external stakeholders, the design studio aimed to bridge across architectural research, pedagogy and society, fostering knowledge exchange and co-production on one hand, while contributing towards sustainability, diversity and inclusivity regarding urban decision-making processes, on the other. Reflecting on the results, various suggestions for improvements are proposed in terms of the outcome, levels of involvement, tools, process and schedule.