By Meghan Hall
The days of scouring for open apartments in newspapers are long over with the advent of sites such as Trulia, AirBnb and Zillow. However, one platform — Blueground — is providing a whole different type of service to its users. Founded in Athens, Greece, in 2013, Blueground leases and furnishes apartments around the world and subsequently rents them out to tenants and travelers on a medium to long-term basis. With a motto of “Show Up. Start Living,” potential tenants can look for properties on Blueground’s site and be moved in — in 24 hours, significantly streamlining the leasing process.
“I think the experience of renting an apartment has remained largely unchanged; you still need to speak to multiple landlords, talk to brokers, visit apartments and of course there is a lot of paperwork,” explained Alex Chatzieleftheriou, CEO of Blueground. “Blueground is focused on making the process of renting an apartment a much easier experience. You can lease an apartment within a few minutes, and then you can walk in with everything sorted for you.”
Blueground launched in the United States in 2018 after five years of success in Europe and now has a portfolio of more than 1,700 apartments in nine cities: New York, San Francisco, Los Angeles, Chicago, Boston, Washington D.C., Dubai, Athens and Istanbul. Chatzieleftheriou was inspired to start Blueground after traveling extensively for business and finding that hotels were not as convenient or as comfortable as renting an apartment. And, as flexible options for transportation and working became more mainstream through the rise of companies like Lyft and WeWork, Chatzieleftheriou wanted to create something similar for the residential market.
“From a technology standpoint over the last 20 years, we have seen the rise of a few large marketplaces,” said Chatzieleftheriou. “We have seen changes in other sectors, for example in getting a taxi, or ordering clothes or groceries online. Or you can walk into a WeWork and gradually expand your business or move to a new location. It gives you a lot of flexibility and doesn’t tie you down to a long contract.”
Blueground rents its apartments from landlords and property owners and signs long-term leases with them, which can last anywhere between 18 to 24 months. Blueground paints and furnishes the apartment, then rents it out to tenants for a minimum of 30 days to up to a year. Blueground pays landlords and private owners regardless of whether or not the unit is rented, providing stability, a luxury that is harder to come by on other short-term rental sites. Because it is investing in the properties it rents out, Blueground typically intends to renew its contracts with landlords and private owners once the 24 months are up.
“What we have in this case is predictability of revenue,” said Peter Herman, Blueground’s regional general manager of the West Coast. “They don’t have to worry if the apartment is going to be taken next week or next month; they can count on the revenue they get from us.”
Blueground has set its sights on further expansion and recently completed a $20 million funding round, which includes investment from Kevin Ryan, founder of several billion-dollar companies including Business Insider, Gilt Groupe and DoubleClick. The funds will power a variety of improvements to not just the Blueground platform but continued expansion throughout Europe and the United States as well. Technological improvements include updating the platform that guests and landlords see, which also means updating Blueground’s mobile platform. According to Chatzieleftheriou, Blueground will be introducing services similar to a concierge in order to help guests and tenants navigate their new cities. Other improvements to the site include reworking Blueground’s internal tools to help with apartment management.
“If you think about our guests, many of them are moving into a new city, and they want to know more about what to do and where they should connect,” said Chatzieleftheriou. “We’re going to do more around community. We’re working on connecting our guests more.”
As for expansion into new cities, Chatzieleftheriou said the final list has not been decided yet. Cities under consideration include Seattle, Denver, Philadelphia and Atlanta. Like the nine cities where Blueground is already operating, all are vibrant urban areas with strong economic fundamentals and potential for growth.
“The business model of Blueground works best in large, metropolitan cities where people are traveling and developing businesses,” said Chatzieleftheriou. “They have large populations and advanced economies as well.”
However, before a final decision is made on where to expand, the Blueground team plans to wait a few more months.
“We still haven’t finalized the list, because we launched the last four cities — Chicago, Los Angeles, Boston and Washington D.C. — just four months ago, so we’re just maturing a little bit in those markets” Chatzieleftheriou added. “We’re going to do a little bit more fact-finding and analysis before deciding where to go next.”
According to Herman and Chatzieleftheriou, Blueground plans to have 50,000 apartments in 50 cities around the world by 2020. For the nine markets that Blueground is currently in, the company plans to scale to three to four thousand apartments by the end of the year. When it comes to expansion in San Francisco, Blueground plans to expand south, heading down the Peninsula into San Mateo, Sunnyvale and San Jose. Currently, Blueground operates 100 apartments in several neighborhoods in San Francisco, including Mission Bay, SoMa, South Beach and Nob Hill.
“We’ll be scaling our business fast because we see a demand, and we see the business model being very relevant,” explained Herman.
Blueground just signed its first apartment in San Mateo, close to some of the region’s largest tech companies, and it plans to expand around the Peninsula and South Bay based on customer feedback. The Blueground team also hopes to expand into North San Francisco, and with a 96 percent rental rate, its future in the Bay Area at least is bright.
“You will see Blueground flourishing and growing,” said Chatzieleftheriou. “More and more people are using Blueground for time savings and flexibility. You usually have to rent for a minimum of year, but with Blueground you can for a few months and try different neighborhoods. It changes the way that people think about renting an apartment.”