A significant initiative with commercial real estate effects was passed on last week’s ballot in Los Angeles. Expected to take effect this month, the measure changes, almost overnight, the labor and affordable housing requirements for developers building in the city, affecting multifamily projects with ten or more units, as well as other projects.
In an attempt to formalize and normalize the apartment subletting craze brought to the mainstream by home-sharing website Airbnb, the website this week launched a program for building owners. In a move that will serve to differentiate the home-sharing leader from its many competitors, Airbnb is now soliciting landlords directly through its new owners program to create a building status declaring the property “Airbnb friendly”.
The program lets property owners decide the rules of sharing and codify these into a set of rules tenants have to follow, as well as making sure that a portion of revenue generated by Airbnb sharing is kept by the landlord.
After a pilot of the program in April proved a success, the company moved ahead with purpose. From Kia Kokalitcheva’s piece in Fortune “Inside Airbnb’s Plan To Partner With The Real Estate Industry”:
For Airbnb, finding a way to involve building owners and landlord is critical. While the company regularly touts stories from hosts whose extra income from renting out their homes has allowed them to afford their rent or a much deserved vacation, it’s no secret that landlords have not been the biggest fans of the practice. According to Airbnb, this animosity largely stems from their lack of control over the activity as tenants are ones usually listing and renting out the homes. Airbnb’s solution: Involving them in the process and giving them control along with a financial gain.
The company began piloting this program in April, and to date, somewhere between 1,100 and 1,500 units are either participating or scheduled to soon join, according to Airbnb. The company declined to reveal much details about the building owners it’s been working with, though it did say they’re in U.S. cities including San Jose, Calif., Philadelphia, and Nashville, Tenn., among others. They also widely vary in size and type, from small “mom and pop”-owned properties, to large companies that manage 50,000 units.
The Plan Design Includes Design
A major evolution of Airbnb that figures in its Friendly Buildings program has been the company’s Samara division, concerned with design of communal housing with the specific intent of community revitalization.
As the technology ecosystem and Airbnb continues to force itself on the operational realities of commercial property, the company continually seeks ways to differentiate itself from a basic business model that, like so many others in the so-called “sharing economy” is utterly dependent upon other people’s stuff — in this case, on the inventory of landlords and property managers that appears nowhere on the company’s balance sheets. Samara’s attempt to become involved in property design boils down mainly to advocating space-sharing features such as smart locks and moveable walls. It’s high concept, unlikely to apply to the vast majority of their business, which is conducted in existing apartments. But it’s also absolutely critical to a business worried about prospering in a future where its competitors seem so numerous and easily spawned.
Adding value to multifamily property without adding staggering cost is a real trick. Investing in the right amenity upgrades can make the difference between struggling to rent out vs. setting up a waiting list for a very in-demand apartment development.
Data, data everywhere, but what are we to think?
A major consequence of the revolution in data collection is the rise of the data journalist – writers using tables of statistical data to tell useful stories in (hopefully) plain English.
Watching the commercial property markets at the national level is tough: trends in one corner of a region need to be placed into context with trends in others in order to form a coherent national picture. National players such as Fannie and Freddie (the GSEs) have lending policies that provide some of that context, but these too are subject to change as regulators and Congress attempt to put the brakes on the kind of systemic risk that torched everything in 2008.
Four areas of retail real estate to watch in ’16, heightened apartment demand stemming from soft home demand, spotlight on Indiana, and a big deal closes in Rubber City, aka Akron, OH — it’s all here in today’s National Commercial Real Estate News Roundup.
The cost of money has come up for the first time in more than nine years: the Federal Reserve Bank announced a raise in its short-term interest rate of a quarter point. For a quick look at various takes on the move, check out the following video gallery
The engineering and commercial histories of tall buildings tell an inspiring story of meeting and overcoming huge challenges in management, in materials science, in finance, in construction technology, and in environmental sciences. Big, Bigger, Biggest is a beautifully made 45 minute film that covers it all, beginning in 1870 with the Equitable Life building in New York and culminating with Dubai’s Burj Khalifa, at 2,722 feet the world’s tallest artificial structure.
At NAR Expo 2015, the announcement came for the year’s winners of the National Commercial Awards. We offer our deepest congratulations to these leaders in their markets and associations!
In the commercial property finance ecosystem, the cost of money is tied to widely used benchmarks such as the federal funds rate. Ongoing rumblings from watchers of the Fed are that the cost of money — aka the Fed’s funds rate — are soon on their way up for the first time in nine years. Remarks from Fed Chair Janet Yellen leading into he December 15-16 Fed meeting seem to support the idea that a boost in rate is on its way.