Co-living Giant Common Files for Bankruptcy, Plans Asset Liquidation
Co-living trailblazer Common, once a dominant force in the North American market, has filed for Chapter 7 bankruptcy and announced the liquidation of its assets. Originating in New York in 2015, the company had secured $113 million in venture capital funding by 2020 but found itself grappling with assets estimated at $10 million versus liabilities amounting to $50 million. With operations spanning 5,200 units across a dozen cities, including 18 properties in NYC, the company encountered significant challenges, such as high interest rates and operational difficulties, ultimately leading to its downfall. Luca Bovone, the CEO of Habyt, expressed disappointment, highlighting Common's innovative approach to living solutions. Tenants residing in Common's properties, known for their communal spaces and shared accommodations, are now faced with the task of seeking alternative housing as the company concludes its operations.
Key Takeaways
- Co-living leader Common files for Chapter 7 bankruptcy and prepares for asset liquidation.
- Common's assets are valued at $10 million, while its liabilities amount to $50 million.
- The company, established in 2015, successfully raised $113 million in venture capital.
- In 2023, Common merged with its German counterpart, Habyt Group.
- Common operated 5,200 units spread across a dozen cities, encompassing 18 properties within New York City.
Analysis
The bankruptcy of Common, driven by elevated interest rates and operational inefficiencies, speaks to the broader hurdles encountered within the co-living sector. Immediate repercussions encompass the disruption of 5,200 tenants and financial ramifications for investors, notably venture capital firms. Over the long term, this occurrence could dissuade investment in analogous startups and induce a reconfiguration of the co-living market landscape. Competitors like Habyt may absorb displaced tenants; however, they will confront heightened scrutiny regarding sustainability. The asset liquidation underscores the sector's susceptibility to economic fluctuations and operational mismanagement, indicating a potential pivot toward more conservative real estate innovation investment strategies.
Did You Know?
- Chapter 7 Bankruptcy: This is a legal process in the United States designed for companies unable to meet their financial obligations. In this process, the company's assets are sold off, and the proceeds are employed to settle outstanding debts, ultimately resulting in the business's cessation.
- Venture Capital: This form of private equity financing is provided by firms or funds to small, early-stage, emerging companies identified as having significant growth potential, particularly in the technology and biotechnology sectors.
- Co-living: This residential living model revolves around residents sharing living space and a common set of interests, values, and/or intentions. It is structured to endorse a more community-oriented or collective lifestyle, often featuring additional shared spaces and amenities not commonly found in typical apartments.