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The country’s largest co-living operator appears to be at death’s door.
Common Living, a “dorms for adults” housing provider founded in Brooklyn in 2015, filed for bankruptcy protection Friday, about a year and a half after European co-living operator Habyt acquired the company in a bid for global dominance.
According to some of the court documents, the company has between $1 million and $10 million in assets but between $10 million and $50 million in liabilities, and “it is desirable and in the best interests of the company, its creditors and other interested parties that a voluntary petition be filed.” Technically, eight entities filed for protection, but the list includes the names of shell companies used by Common.
Offering 7,000 rooms in more than a dozen cities but looking to quadruple its size in the next few years, Common was an early player in an industry that offers a product resembling old-fashioned single-room-occupancy hotels. Tenants lease rooms in apartments and share common areas such as kitchens; co-living landlords cover utilities and housekeeping services.
Common was also one of the industry’s success stories, surviving the shake-out that occurred early on in the pandemic, when the housing market froze, and actually expanding during that period by snapping up less-established startups including San Francisco-based StarCity in 2020.
Investors liked what they saw. The company, founded by tech entrepreneur Brad Hargreaves, a Crain’s 40 Under 40 honoree in 2017, raised $113 million in venture capital funding through 2022 and also enjoyed financial backing from New York developers and real estate firms such as Monadnock Development, Sugar Hill Capital Partners, and RAL Cos., according to the list of creditors submitted to the U.S. Bankruptcy Court in Delaware. Hines, Zillow and CoStar are also on the 37-page list.
Even after the 2023 merger with Habyt, investors continued to show support, pouring an additional $42 million into the combined company in fall 2023. Around that time, Luca Bovone, founder and CEO of seven-year-old Habyt, which previously focused on co-living sites in Europe and Asia, spoke of the promise of the Common merger.
“Our new combined resources present a fully digital, easy solution to access rental properties across the world, something that has been historically derailed by endless paperwork or bureaucracy,” Bovone said in a statement. Habyt is not expected to be affected by Common’s bankruptcy, news of which was first reported by real estate data firm PincusCo.
Common, unlike many co-living players, did not own apartment buildings but managed them on behalf of landlords and tenants, a strategy that Hargreaves long held minimized risk. But Common does not ever seem to have achieved profitability.
And in the past couple of years, the company came under withering criticism from tenants about intra-roommate fights, unsanitary living conditions and lack of security, which led Common to double the size of its support teams.
In the wake of the concerns, Hargreaves stepped down as chief executive officer in 2022 and was replaced by hotel industry veteran Karlene Hollomoan.
Throughout, though, the company maintained a bold vision about expansion. In 2022, when Common controlled 7,000 rooms in more than a dozen cities, it vowed to add an additional 18,000 rooms by 2027.
Common properties in Manhattan include 335 E. 27th St., a micro-unit rental tower in Kips Bay, and 215 East 124th St. in Harlem.
The bankruptcy action was a Chapter 7 filing, meaning a judge will not seek to come up with a plan for Common to repay its debts but will liquidate the company’s assets.
An email sent to Hargreaves for comment was not returned by press time. And lawyer Daniel Astin, whom Common has enlisted to help with the liquidation, did not return a call.
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C. J. Hughes , 2024-06-03 19:45:59
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