Commercial Basis explores how technology, branding and demographic preferences are shaping office and retail real estate in New York City. As these forces break down the barriers from where we live to where we work and shop, Lead Commercial Specialist Alex Cohen will assess the impact on real estate values and opportunities.
Much has been written about Airbnb’s impact on demand for hotels and apartment rents in specific neighborhoods. In addition, we are now familiar with the controversial restrictions municipalities have enacted to minimize the perceived deleterious consequences of short-term rental in multifamily buildings. Now we are observing the dramatic impact of Airbnb and its peers on second home investment markets like the Hamptons.
Historically, many owners of Hamptons vacation houses benefited from the income of monthly or summer rentals, which often more than offset annual mortgage, tax and maintenance expenses. However, this year, local brokers report that summer rentals were off nearly 50% as compared to typical years, particularly in the under $75,000 rent per summer category. This appears to be a direct result of large numbers of available Airbnb shorter rentals, despite greater scrutiny and regulation of shorter term rentals by the towns of Southampton, Riverhead and Southhold and throughout the unincorporated portions of the Town of East Hampton. And this phenomenon is not restricted to the Hamptons. Christopher Chauvin, the president of immidia.com, a concierge app for villa, car and plane rentals, reports a similar drop this summer in seasonal rentals in the south of France.
For many renters the option to pick and choose which specific weeks and weekends they commit and pay for is particularly attractive. And for owners of well-reviewed and attractively photographed properties, the rental income from multiple shorter rentals can in some cases exceed that of traditional longer term commitments (while allowing owners greater flexibility to also use and enjoy their properties). However, managing a large number of shorter term rentals requires greater effort by property owner, particularly in effectively pricing to capture demand and for maintenance, as cleaning and associated responsibilities are shifted from tenant to owner in the Airbnb model. In other resort-oriented markets like Charleston, South Carolina, these issues have contributed to the rise of short-stay management firms like Duvet (stayduvet.com) which in return for 25% of rental income, price properties for short-term rentals, manage advertisements, guarantee 5-star ratings and coordinate check-ins and check-outs.