Housing-Starved Bay Area Seeing Short-Term Rentals Turn Into Long-Term Options
Some Bay Area renters are turning formerly short-term rentals into long-term housing supply.
Since March, West Coast property management company Onerent has added hundreds of Bay Area units formerly occupied by short-term tenants to its long-term portfolio, executives told Bisnow.
“Prior to COVID-19, probably less than 5% of our new customers had short-term tenants," Onerent co-founder Chuck Hattemer said. "Once the pandemic hit, that number jumped to nearly 30%, new customers coming to us, converting from short-term tenants.”
Like the travel industry as a whole, short-term rental companies have been devastated by the coronavirus pandemic and travel stoppages. Though the largest of the bunch, Airbnb, still reportedly wants to go public this year, its revenue is down nearly 70% year-over-year, Bloomberg reports.
Smaller competitors have been similarly decimated. After deciding to close temporarily, Stay Alfred shuttered permanently in May while rival Lyric, too, has been forced to shutter most of its locations.
The situation has made entry into the Bay Area housing market, where demand is easily counted on, increasingly appealing, according to Hattemer. He said Onerent has seen a surge in interest from owners that had master-lease agreements with companies like Zeus Living, a corporate housing startup that often works with independent owners
Rather than negotiating a revenue-sharing agreement, owners are often opting to put units on the long-term market, Hattemer said.
“We have seen some of these owners that didn’t want to do a revenue-sharing agreement just move back to a more stable, long-term lease option with a tenant," he said. “They figure, why risk the revenue-share model and face downside on vacancy when I can just kind of guarantee my income passively?”
More units becoming longer-term rentals would be a welcome sign for housing advocates, many of whom have decried master-lease agreements by short-term rental companies as eating away at would-be housing solutions. But the implications on the Bay Area rental market of such a trend could be limited, Hattemer and CoStar Bay Area Director of Market Analytics Jesse Gundersheim said.
Though Hattemer said Onerent alone has seen 300 to 400 Bay Area short-term rentals put on the long-term market, once travel normalizes, many owners will likely aim for the higher daily rates earned by short-term rentals, he said.
"Overall, we're thinking this is may be a blip trend," Gundersheim said in an interview with CoStar Senior Market Analyst Marco Cugia.
Even so, Airbnb said in April that it will focus more on longer-term stays. In the meantime, hosts accepting long-term stays through Airbnb have nearly doubled since last year, a company spokesperson said.
