Are long-term apartment rentals Airbnb’s next target?

Some developers are thinking about that possibility, says one West Coast real estate consultant. 

December 07, 2015 |
Are long-term apartment rentals Airbnb’s next target?

An Airbnb office in Toronto. Photo: Raysonho/Wikimedia Commons.

Now that Airbnb has rattled the hotel industry, is it only a matter of time before it offers customers longer-term rental options?

The influential West Coast consultant John Burns Real Estate Consulting recently told its newsletter subscribers that it “senses a trend developing” where Airbnb—which is on pace to book 80 million nights in 2015—has its expansion eyes set on becoming part of the apartment market.

The consultant recently conducted an apartment feasibility study for a proposed new building whose developer might include some units devoted to Airbnb users. John Burns suggests that other apartment developers could consider setting aside some units “as a kind of Airbnb rental pool to maximize revenue and market flexibility,” especially when apartment market conditions are soft.

“The key will be having a location that can tap into the burgeoning Airbnb user stream,” the consultant writes.

It remains to be seen whether what Burns has spotted turns out to be a trend or an anecdote. But there’s no denying that since 2008, when it was founded, San Francisco-based Airbnb has become a juggernaut, with listings in more than 34,000 cities and 190 countries. Investors value the company at around $24 billion, according to the New York Times.

The company has also proven itself to be a savvy defender against critics who feel threatened by its growing popularity and insist that its business model unfairly skews the affordable housing market or skirts regulations and taxes enforced on other forms of hospitality.

Airbnb spent heavily last year to defeat a law in San Francisco that would have limited its services there. As proof that it wasn’t materially affecting housing affordability by turning homes into short-term rentals, Airbnb recently wheeled out a report that claimed nearly 80% of its listings in Sealtle are rented less than 90 days a year.

Crain’s New York Business reports that Airbnb has been lobbying New York lawmakers to change rules that limit the number of days an owner or renter in New York City can lease or sublease a home or apartment to under 29 days. Airbnb claims it removed more than 2,000 listings in 2014 after New York State’s attorney general, Eric T. Schneiderman, filed an affidavit that alleged that two-thirds of the apartments listed in the city were illegal sublets.

According to data the company recently made public about its network in New York City, as of Nov. 17, 2015 there were slightly under 36,000 listings on its platform, and the median number of nights booked per listing in the previous year was 42.

Its New York City data also show that hosts there earn a median of $5,110 per year from renting their apartments or homes to visitors. Airbnb characterizes these earnings as “an economic lifeline for families.” The company data show that 72% of its hosts in New York say they depend on this income to stay in their homes.

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