Shared-Apartment Business Merger Creates Industry Leader

One of the largest co-living companies in the U.S. is merging with a European peer to create one of the world’s largest providers of shared apartments for young professionals. The new company will have a presence in major cities across the globe, providing affordable, convenient housing for young people who want to live and work in vibrant urban areas.

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Common, a New York-based company, manages more than 4,000 apartments in the United States. Habyt, a Berlin-based company, operates around 7,000 apartments in Europe and Asia. The two companies have merged, and the new company will be called Habyt Group. Luca Bovone, a co-founder of Habyt, will serve as the chief executive of the new company. The financial terms of the merger have not been disclosed.

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At co-living buildings, tenants usually lease rooms in larger apartments shared with other tenants. Renters have access to living rooms, kitchens and other common spaces, and amenities like cleaning services and dog walking. Co-living can be a great option for people who want to save money on rent and enjoy socializing with their fellow tenants.

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The Covid-19 pandemic has been tough on co-living operators. Lockdowns and falling rents in some cities have hit their revenue hard, while investors have become more cautious about funding money-losing real-estate leasing startups. As a result, the number of operators has been shrinking as companies have gone out of business, merged or taken over buildings of bankrupt rivals.

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Co-living apartments are in high demand once again, with occupancy rates hovering around 90% in the United States. Rents are also on the rise, currently sitting about 10% above 2019 levels, according to real estate brokerage firm Cushman & Wakefield. The worsening global housing shortage and inflation are likely to boost co-living companies, as more young professionals seek roommates to save money on rent, said Common’s CEO Karlene Holloman.

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In a vote of confidence for the business, giant apartment landlord and manager Greystar Real Estate Partners LLC last year launched a co-living brand. This shows that Greystar believes that the co-living market has potential and is worth investing in. Habyt signs long-term leases for apartment buildings and rents out bedrooms in shared, furnished apartments for terms as short as six months. Their investors include venture-capital firms Sequoia Capital and Burda Principal Investments.

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Many of its customers are young professionals moving to a new city, Mr. Bovone said. Common has a business model similar to WeWork's, although it manages most of its units under revenue-sharing agreements with landlords, according to the company’s chairman, Brad Hargreaves.

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Neither company is profitable, and Mr. Bovone said that by combining resources they will be able to keep costs down and appeal to more customers.
Common, a startup that provides co-living spaces for renters, has raised over $110 million from investors and expanded into 10 U.S. cities. The company has faced complaints from some tenants over safety issues and poor customer service. Last year, hotel industry veteran Karlene Holloman succeeded Mr. Hargreaves as the company’s CEO.

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Habyt's Mr. Bovone said that while the pandemic has been challenging for the industry, it has also helped increase demand for shared apartments.
"The pandemic has actually increased the number of people seeking to avoid loneliness," he said.
Common has also been expanding its business beyond co-living in recent years, taking over management of traditional apartments. According to Mr. Bovone, the combined company will continue on this path.

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"We all want to get to a place where we can manage all kinds of properties using the same technology, process and relationships with landlords," he said.