Happy Monday! Let’s start you off with some breaking news.

Common Living, one of the largest co-living firms in the U.S., is shutting down. 

The firm, which was founded in 2015 and had grown through acquisitions of other co-living companies, filed for Chapter 7 bankruptcy late Friday, indicating its plans to liquidate assets and cease operations. 

It has an estimated $1M to $10M in assets and $10M to $50M in liabilities, according to the filing in the U.S. Bankruptcy Court for the District of Delaware. The company said it has at least 200 creditors but fewer than 1,000 entities that could have a claim against it.

Common is a giant in the sector, operating more than 30,000 units across 40 cities since a January 2023 merger with Habyt, which spread its footprint through Europe and Asia. 

It was also the last man standing among the pioneers of the model, which involves buying or developing multifamily assets or entering management agreements with landlords and leasing out individual bedrooms rather than entire units. The sector emphasizes common spaces and was put forward as a way to make high-end, high-density living more affordable.

Co-living had its heyday in the middle of the last decade, as Common was joined by firms like WeLive, The Collective, Ollie and Medici in a race to build tens of thousands of units. The pandemic may have contributed to the sector’s demise, but the signs were already there. WeLive had all but died by 2019. Medici’s co-living arm, Quarters, filed for bankruptcy in 2021, and The Collective went under the same year. Ollie was bought by Starcity, which was then acquired by Common, so it’s gone now, too. 

The nail isn’t officially in co-living’s coffin, as there is still the occasional new project or new company forming with big ambitions, but it’s pretty clear at this point that at least for now it will remain a niche play rather than a massive industry changer. 

— Mark F. Bonner, Jay Rickey, Kayla Carmicheal and Catie Dixon

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On Our Radar

• Construction spending unexpectedly fell for the second month in a row. It dropped in April as U.S. companies and the government scaled back projects amid high interest rates.

• The European Central Bank is expected to drop interest rates this week. That will make borrowing look different in the U.S. and UK versus Europe, which could impact global investment trends.

• Mexico elected Claudia Sheinbaum as its first female president. The climate scientist and former Mexico City mayor takes over a country facing slow economic growth and a new wave of drug cartel violence. This morning, her election caused the peso to drop about 3% against the dollar.

• Nvidia unveiled its next-generation data center-preferred AI processors. The chipmaker, which announced Rubin on Sunday, has taken the stock market by storm this year. Rubin will replace the Blackwell chip for data centers.

• Hurricane season has officially arrived. In what is predicted to be one of the most active, dangerous and consequential hurricane seasons of all time, Mark’s thoughts go back to his experience covering one of the deadliest, costliest storms in U.S. history: Hurricane Katrina.

• Happy Pride Month! A coalition of real estate companies in the UK is launching an event series focused on supporting the LGBTQIA+ community. “The lack of visible LBGTQ+ role models in the property sector can hinder personal and professional growth,” one exec said.

• And this month marks the 50-year anniversary of what has been voted the worst song ever released. Feast your ears (or don’t) on Paul Anka and Odia Coates’ You’re Having My Baby. Jay can’t watch the video without covering his eyes to mitigate the cringe. 

Today's Deep Dive: Starwood May Be Just The Start: Experts See Problems Under The Hood For Huge CRE Funds

Starwood is taking all the heat, but it likely isn’t the only company facing the fire of liquidity problems. 

Fundraising has steadily declined for nontraded REITs over the last two years, from $12B in Q1 2022 to $1.4B in Q1 of this year. Meanwhile, redemptions rose from $12B in 2022 to $18B last year and are expected to surpass that in 2024. Toss in the valuation drops and debt maturities the whole CRE sector faces, and it’s a recipe for serious pain.

"Anyone who's in a negative fund flow position is moving towards having the liquidity issues," Stanger CEO Kevin Gannon told Bisnow Boston Reporter Taylor Driscoll. 

Read the full story about the unique pressures facing nontraded REITs. 

This Morning’s News

Now Carbon Is Seen As CRE Risk For Banks (Bloomberg): Global banks are now assessing real estate risks based on carbon emissions, reflecting a shift toward environmental accountability within CRE. Read up on the new litmus test.

Colliers Expands With $475M Englobe Acquisition (Colliers): Colliers International is set to acquire engineering firm Englobe for $475M to enhance its services in environmental and geotechnical engineering. Englobe has 2,800 employees and generated $340M in revenue last year. Get the details about the acquisition.

Newmark Guns For Top Spot (TRD): Newmark is vying for the top position in commercial real estate, challenging established market leaders with expansions and high-profile deals. Get up to date on Newmark's game plan.

LaVie Care Centers Files For Bankruptcy (Bloomberg): Nursing home operator LaVie Care Centers has filed for bankruptcy, raising concerns about the future of its care facilities. It has already divested more than 90 facilities. Here's what it means.

Three-Quarters Of European CMBS Can’t Be Refinanced (Bisnow): Almost €3.2B of the €4.4B secured against European office and retail property is unlikely to be refinanced as values and income have dropped below palatable loan-to-value and income cover ratios, Morningstar DBRS said. Those loans will need to be restructured when they mature. Learn more about lending pain.

Pro Sports Expands To Smaller Markets (NYT and Bisnow): Major professional sports leagues are diversifying their geographical presence and fan base by considering smaller markets for new stadiums and arenas. Learn about the NHL's downsizing trend and how the rise in popularity of women's sports is affecting real estate.

Takeover Interest For Penn Entertainment? (Seeking Alpha): Penn Entertainment may see some takeover interest after an activist investor criticized the company's strategies and executive compensation. The investor, Donerail Group, is pushing the company to sell. Read more here.

Resignations At Whitestone REIT (Whitestone REIT): Two board members have stepped down at Whitestone, which says it will engage with a search firm to find replacements. Learn more about the leadership shake-up.

Big Tech, Bitcoin Forced To Compete For Data Center Space (Bisnow): A new battle is brewing in the data center space, as two types of users — crypto miners and AI computing — that typically took different types of space are meeting in the middle and fighting over the same locations. Dig into the demand drivers.

Nice Office? That'll Cost You (CoStar): Design and construction costs for top-rated office build-outs may jump 2%. This is where the coveted offices are.

Japanese Arcades Revitalize U.S. Malls (Bloomberg): Japanese video arcade company Round One is accelerating its efforts to build arcades at U.S. malls. Read more about the resurgence of arcades.

Energy-Storing Skyscrapers (Crain’s New York): Skidmore, Owings & Merrill has introduced a concept for skyscrapers that can store energy. If a building is above 660 feet, a gravity-based system can store enough power to cover its operations. Get the details on the eco-conscious design.

Airbnb Leverages Host Community (WSJ): Airbnb is mobilizing its vast host network to challenge restrictive state laws and advocate for more favorable regulations impacting short-term rentals. Inside Airbnb's fight against restrictions.

Dollar General's Strategy Shift (CoStar): Dollar General has postponed the roll-out of some new stores, but still plans to debut 730 locations and remodel more than 1,600 stores. Here's how the retailer's plans have shifted.

New Signs Of An Improving Real Estate Market? (CoStar): Although property prices dropped at the start of the quarter, there are emerging signs of improvement. Transaction volume and average deal size rose while time on market fell. Read more here.

Trump's Financial Influence On Witnesses (ProPublica): Multiple witnesses in Trump’s legal cases have reportedly received financial benefits from his business and campaign activities. Get into the details.

Law Firms Increasing Office Leases (Commercial Search): Legal sector leasing activity totaled 1.7M SF in Q1, which Savills says is due to an increase in transaction activity, not just large leases. Learn about the biggest moves in the sector.

Renters Facing Sticker Shock Once More (CoStar): Residents in rental housing with the lowest ratings — three stars or less — are seeing the highest rent growth increases. Read more about the surge.

Shift In Housing Construction (CoStar): Construction on build-to-rent houses was nearly 16% higher in the last four quarters than it was the previous four quarters. Get into BTR's growing popularity.

Hyatt's Expanding Horizons (Hyatt): Hyatt continues its global expansion with a record pipeline of 129,000 rooms. Hyatt’s entry into the upper-midscale extended-stay segment, Hyatt Studios, now has over 250 deals in various stages of negotiation. Check into Hyatt's growing presence.

New Appointment At Knight Frank (CoStar): Knight Frank named a new global head of its healthcare division, UK adviser Julien Evans. Here's his resume.

New Orders Return To Growth In Manufacturing (Seeking Alpha): The PMI Manufacturing index has risen, indicating that the manufacturing sector is expanding. More about the growing sector.

Reinsurance Market Is Warming Up (WSJ): "Investors are again becoming attracted to catastrophe risk as an expected active hurricane season begins," according to the Wall St. Journal. Read more here.

Alaska Airlines Expands Training Facilities (Alaska Airlines): Alaska Airlines is set to spend $100M renovating a recently acquired 600K SF training facility that previously housed Boeing Commercial Airplane HQ. Learn more about the makeover.

Homebuyer Pushback On Prices (Bloomberg): The housing market in the United States is finally seeing listings rise, but buyers aren’t showing up in some markets. Here's why.

Predicted Drops In Some Housing Prices (News Nation): Analysts have identified U.S. cities where housing prices are likely due for a decline. See where it's happening.

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The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at firstdraft@bisnow.com. 

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