HubHaus

About HubHaus

HubHaus, founded in 2016 by Shruti Merchant and Kerry Jones, operated within the co-living real estate market, targeting young professionals in high-cost urban areas like the San Francisco Bay Area, Los Angeles, and Washington D.C. Merchant's personal struggle to find affordable housing and a sense of community in Silicon Valley after leaving medical school was the catalyst for the company's creation. The business model centered on leasing large, single-family homes with five or more bedrooms from property owners and then subleasing the individual rooms to tenants.

This master lease model aimed to provide landlords with a single, reliable point of contact and guaranteed rent, mitigating the risks associated with tenant turnover. For its members, HubHaus furnished the common areas, handled utilities and Wi-Fi, and offered community-focused events and services like housekeeping. Revenue was generated by charging a premium on the individual room rents. The company leveraged the economic principle that the price per bedroom decreases in larger properties, allowing them to offer rooms that were often more affordable than studio apartments, despite their markup.

HubHaus secured approximately $11.5 million in venture capital from investors including General Catalyst and Social Capital, reaching a valuation of around $40 million at one point. By mid-2019, the company managed over 1,000 rooms. However, the business faced significant challenges. The failure of WeWork's IPO created a difficult fundraising environment for related real estate ventures, hindering HubHaus's Series B efforts. This forced the company to cut staff and services in an attempt to achieve profitability. The final blow came with the COVID-19 pandemic in 2020. The shift to remote work, rising unemployment, and health concerns about shared living led to a dramatic increase in vacancies, from under 5% to over 30%. The company's financial model, which operated on thin margins, could not withstand the simultaneous pressures of lost revenue and ongoing lease obligations. HubHaus ceased operations and entered liquidation in September 2020, leaving many tenants and landlords in a difficult financial position.