Another 18,000 bedrooms are in the pipeline for the next five years, Mr. Hargreaves said, adding that the companies that have failed have generally paid huge sums to lease entire buildings, rather than collect fees based on rents, like Common, which acquired Starcity’s assets last year.
“Our model has done well across the board,” he said.
Mr. Hargreaves declined to say whether Common was profitable. Like other co-living providers, it has been powered by venture capital, in its case to the tune of $113 million across several rounds of fund-raising.
Being large and well funded does not seem to insulate against problems. This spring, some Common tenants lobbed complaints about roommate fights, poor sanitation and inadequate security, which forced the landlord to double the size of its support teams. In August, Mr. Hargreaves stepped down as chief executive and was replaced by Karlene Holloman, a hotel industry veteran, although he remains as chairman and chief creative officer.
As co-living proliferates, the authorities seem to be paying more attention. Letitia James, New York State’s attorney general, said this year that she was monitoring housing-code issues and other potential co-living violations in response to complaints.
This spring, New York City fined the landlord of a small apartment building on West 107th Street in Manhattan over a conversion into a co-living facility. Required sprinklers and fire alarms were missing in an apartment after the landlord had added an extra bedroom to it, records show, though by September, the owner had corrected the problems.
Co-living providers run afoul of the rules in other ways, officials say. Some providers install locks on doors to make bedrooms private. But in New York, locks are not allowed in shared housing. Adding them creates the equivalent of a single-room-occupancy hotel, a once-common offering that is now generally banned.
But lawmakers in other cities facing a housing crunch, like Philadelphia, are considering allowing the development of that kind of hotel again. As it is, sites can be tough to find, developers say. Since the pandemic, industrial land that was once ripe for co-living housing has been in higher demand for warehouses and shipping centers as manufacturers try to unclog bottlenecked supply chains.
