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“The sharing economy is here. This is something the Millennials, 75 million strong and making up the renter’s generation, are driving. If you’re talking about offering competitive amenities to residents, you can’t ignore this trend. It’s happening right in front of us.”
-Sean Conway, CEO of Pillow Residential
The 2017 NMHC Fall Board of Directors & Advisory Committee Meeting took place from September 12-14 in Washington, D.C. This annual conference is hosted by the National Multifamily Housing Committee to share new research and developments in the apartment industry, and provide industry peers a forum to debate about relevant issues. One of the main highlights of the event was a panel in which speakers from five startups engaged in a lively discussion about the future of the apartment industry. Participating in the panel were leaders from Pillow Residential, Urbandoor, Parallel, WhyHotel, and Sublet Alert, all of whom expressed great deals of optimism in the ability of technology to adapt and solve the rising issues of the short-term rental landscape.
The biggest takeaway for both building owners and managers was that the prevalence of short-term rentals has climaxed to the point where it can no longer be brushed off as an isolated occurrence that happens in other properties. According to most recent data, roughly 65% of booked nights on Airbnb take place in multifamily apartment complexes. Not all apartment owners may be aware of this trend, but one way or another, short-term rentals are becoming an ubiquitous and highly relevant phenomenon in local communities.
Moreover, as the market for short-term rentals continues to gain traction in apartments across the nation, building owners and operators alike must prepare to face the barrage of such legal issues as lawsuits and financial liability, and other community concerns that come with short-term rentals. This is where the five tech startups offered their expertise, having developed each of their businesses to address the changing dynamics of the apartment industry, including local rules and regulations, and community safety standards.
In regards to the research on the attitudes of local residents towards short-term rentals, there appears to be a direct correlation between the age of the residents and their openness to accept short-term rentals in their buildings. According to preliminary results from the yet-to-be released 2017 NMHC/Kingsley Associates Apartment Renter Preferences Survey, the large majority of those aged under 54 view short-term rentals in their buildings positively or with indifference. This is especially true for the youngest demographic with over 80 percent of residents under 25 stating that they would be willing to accept short-term rentals in the buildings or at least not be against it. What’s even more promising is that these results were collected primarily from residents who were unaware of such services as Pillow Residential that facilitate short-term rentals and provide property management the tools necessary to maintain guest and resident controls.
Similarly, there is a relationship between the residents’ age and reluctance to live somewhere that permits short-term rentals. The older residents seem much more disinclined to live in a community that legally permits short-term rentals. Approximately 5 percent of those aged under 25 stated they would not rent in a building that allows short-term rentals, whereas this number rose sharply for those aged 55 and older.
Much of the panel discussion was focused on the tremendous growth of Airbnb over the past few years. This is the case not only for leisurely travel among vacationers, but also business travellers whose companies have partnered with Airbnb to provide lodging over traditional hotel rooms. In fact, according to a new report by Morgan Stanley Research, the number of business travellers using Airbnb increased from 12 percent in 2015 to 18 percent in 2016, and is predicted to rise to 23 percent by the end of this year. Moreover, the study claimed that at the current rate of Airbnb usage, short-term rentals will essentially cannibalize hotel businesses and open the door to an unprecedented revenue stream for the apartment industry.
For Joe Fraiman, the President and COO of Parallel, a short-term rental partner for premium multifamily communities that provides luxury furnished units, this upsurge in Airbnb demand represents an ideal business opportunity for apartment building owners to jump in on. “The picture we see is that short-term rentals represent a new source of high-quality demand for assets you already own,” Fraiman said.
“The challenge is, how does the industry capitalize on that demand? Short-term rentals will go from something forbidden to something that is actually courted in a professional context and seen as a fixture in the industry.”
Written by Harry Lee · September 26, 2017