SHORT-TERM RENTALS IN AUSTIN, TX Smart City Policy Summit - PowerPoint PPT Presentation

THE IMPACT OF SHORT-TERM RENTALS IN AUSTIN, TX Smart City Policy Summit September 17, 2019 Todd LaRue, Managing Director

SHORT TERM RENTALS IN AUSTIN, TX

SHORT TERM RENTALS IN AUSTIN, TEXAS Total Short Term Rentals by Zip Code Short Term Rental The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 3

SHORT TERM RENTALS IN AUSTIN, TEXAS ► In the central zip codes of Austin, TX there are 9,021 short term rentals Total Short Term Rentals by Zip Code » Of these, 6,996 take up a full home or unit Number of Short » 1,882 operate full time (300+ days/year) Term Rentals » 1 – 150 1,553 operate full time and take up a full home or unit. 151 – 300 301 – 500 501 – 800 ► The largest proportion of short term rentals are located in East Austin 801 + and the neighborhoods just south of the Lady Bird Lake (SoCo, Zilker, South Lamar). » This indicates that short term rentals concentrate in high density residential areas The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 4

SHORT TERM RENTALS IN AUSTIN, TEXAS ► The median price of short term rentals in Austin is $150 Average Short Term Rental Price by Zip Code » This median is the same for entire home, full time short-term rentals Short Term Rental Price ► The most expensive short term rentals in Austin are located in the $1 – $150 affluent West Lake area, where customers are able to rent entire villas $151 – $250 and mansions for large groups. $251 – $500 $501 – $750 $751 + The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 5

FULL TIME/ENTIRE PLACE SHORT TERM RENTALS ► When we limit for full time/entire place short term rentals, South and East Austin still have the greatest number » South Austin and the West Lake area have the highest percentage of full time/entire place short term rentals out of the total Full Time/Entire Place Short Term Rentals Full Time/Entire Place Short Term Rentals as a Percentage of Total Number of Short Percent of Total Term Rentals No Data 0 – 10 < 7% 11 – 50 7% - 14% 51 – 150 14% - 16% 151 – 250 16% - 20% 251 + 20% + The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 6

RENTAL MARKET

BRANDED SHORT TERM RENTALS IN ATX ► There are many companies that either manage home rentals for short term rental owners or rent units in existing multifamily buildings and put them on the short term rental market through their own company. ► These companies that acquire units and rent them out make up 372 of the short term rental in Austin, all of them occupying an entire home or unit. Often, these units exist within residential apartment buildings, allowing guests access to the spaces and amenities of otherwise private communities. ► These “brands” are an alternative to cookie -cutter hotels while offering a consistent level of quality sometimes absent in the short term rental market. ► By operating within existing communities, these short term rentals can offer high end amenities (gym, pool, etc) similar to those offered by hotels, but still make guests feel they are getting the authentic travel experience of classic short term rental. ► This arrangement benefits rental properties by either filling vacant space during the community’s lease -up period, or serving as a steady, multi-year tenant for the building. The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 8

RENT GROWTH AND SHORT TERM RENTALS ► There is no strong indication that short term rentals have impacted rent growth in Austin’s urban core. ► It is more likely that Austin’s economic growth and increased popularity with affluent young people has made it a popular des tination for tech savvy tourists, leading to growth in tech-driven, short term rental services like Airbnb. Rental Rate Increase and Short Term Rentals Multifamily Vacancy and Short Term Rentals $2.00 1,600 1,600 12% $1.80 1,400 1,400 10% $1.60 1,200 1,200 $1.40 8% 1,000 1,000 $1.20 $1.00 800 800 6% $0.80 600 600 4% $0.60 400 400 $0.40 2% 200 200 $0.20 $0.00 0 0 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD Total STRs (Entire place, full time) New STRs (Entire place, full time) Effective Rent Per SF New STRs (Entire place, full time) Total STRs (Entire place, full time) Vacancy Percent The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 9

RENT GROWTH BY ZIP CODE ► Downtown and West downtown have long been the most expensive areas of Austin, with East Austin becoming significantly more expensive in the last decade. Rent Growth by Zip Code $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 78701 (Downtown) 78702 (East Austin) 78703 (West Downtown) 78704 (South Austin) 78705 (Campus) 78721 (MLK) 78722 (North East) 78723 (Upper North East) 78731 (Highland Park West) 78741 (Riverside) 78746 (West Lake Hills) 78751 (North Austin) 78752 (Highland) 78756 (Rosedale) 78757 (Allandale) Source: CoStar, RCLCO The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 10

SHORT TERM RENTALS BY ZIP CODE ► South and East Austin have seen the most substantial influx of short term rentals since Airbnb was launched in 2008. » Growth between 2017 and 2018 was most significant across the board. Total Short Term Rentals by Zip Code 600 500 400 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 78701 (Downtown) 78702 (East Austin) 78703 (West Downtown) 78704 (South Austin) 78705 (Campus) 78721 (MLK) 78722 (North East) 78723 (Upper North East) 78731 (Highland Park West) 78741 (Riverside) 78746 (West Lake Hills) 78751 (North Austin) 78752 (Highland) 78756 (Rosedale) 78757 (Allandale) The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 11

SHORT TERM RENTAL GROWTH IN HOT MARKETS Rent Growth and Total Short Term Rentals by Submarket $3.00 500 450 $2.50 400 350 $2.00 300 Total AIrbnbs $1.50 250 Rent/SF 200 $1.00 150 100 $0.50 50 $0.00 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 78704 Total STRs (South Austin) 78702 Total STRs (East Austin) 78703 Total STRs (West Downtown) 78701 Total STRs (Downtown) 78705 Total STRs (Campus) 78704 Rent/SF (South Austin) 78702 Rent/SF (East Austin) 78705 Rent/SF (Campus) 78703 Rent/SF (West Downtown) 78701 Rent/SF (Downtown) The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 12

SHORT TERM RENTALS: PERCENT OF TOTAL INVENTORY ► It should be noted that over time, entire home, full time short term rentals have increased as a percentage of total multifamily rental inventory. ► This increase was most significant in 2018, with 2019 promising strong growth as well. ► While this percentage is still small, the data shows that short term rentals are not growing parallel to inventory, and that over time, full time short term rentals may take up more and more rental space in Austin. Short Term Rentals as a Percent of Total Inventory 100,000 5.00% 90,000 80,000 4.00% 70,000 60,000 3.00% 50,000 40,000 2.00% 30,000 20,000 1.00% 10,000 0 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD Inventory Units Total STRs (Entire place, full time) STR Percent The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 13

SHORT TERM RENTAL PERCENTAGE BY ZIP CODE ► In all zip codes, short term rentals have increased as a percentage of total inventory. » This is most substantial in “hot” submarkets like East Austin, and established neighborhoods close to downtown like South Aus tin and West Downtown. Short Term Rentals as a Percent of Total Inventory by Zip Code 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 78701 (Downtown) 78702 (East Austin) 78703 (West Downtown) 78704 (South Austin) 78705 (Campus) The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 14

HOTELS

HOTELS IN AUSTIN TEXAS ► Most hotel deliveries from the last ten years have been close to ► Almost all recent deliveries have been in areas with high downtown, West Downtown, and East Austin concentrations of short term rentals Hotels in Austin, TX New and Future Hotels Year Built Before 1945 1946 – 1985 1986 – 2000 Year Built 2000 – 2010 2010 – Present Post-2008 Future Future Source: CoStar, RCLCO, Inside Airbnb, Esri The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 16

AUSTIN LA ORLANDO DC 221 W 6th St 11601 Wilshire Blvd 964 Lake Baldwin Ln 7200 Wisconsin Ave Suite 2030 Suite 1650 Suite 100 Suite 1110 Austin, TX 78701 Los Angeles, CA 90025 Orlando, FL 32814 Bethesda, MD 20814 Todd LaRue, Managing Director P: (512) 215-3157 E: tlarue@rclco.com W: RCLCO.COM