There’s a new short-term rental niche that’s growing more popular, and avoids most short-term rental regulations. It’s a niche for high-end furnished units commonly known as corporate rentals that are leased for a minimum 31 days. By renting them for more than 30 days, they typically avoid short-term rental rules, although some cities are taking notice.
The Los Angeles Times says, the corporate rental market is growing quickly to satisfy demand among traveling professionals, and other individuals who want temporary housing. (1) Mashvisor describes corporate rentals as “fully furnished real estate properties of high quality to be rented out to business travelers for a minimum of one month.”
StayTony Corporate Rentals
StayTony is capitalizing on the trend with a growing portfolio of corporate rentals. It renovates housing units, and fills them with nice-quality furniture and other amenities. Rents are higher than a long-term unit, but less than a hotel. StayTony is also offering a financing feature to make them more affordable. Founder Tony Diamond says his tenants can move in with a low down-payment and choose a financing option for the monthly rental payments.
He told the Times that he was inspired by the corporate housing concept after hearing about an $1,800-a-month studio in Hollywood that was renovated, furnished, and rented to a traveling nurse for $3,300 a month.
But it isn’t just business travelers who need a place for maybe one to three months at a time. He says corporate rentals are good for anyone who needs a temporary home for more than a month — for example, if they are relocating to the area, going through a divorce, or remodeling their own home.
StayTony got its start in Los Angeles. Diamond said in an interview with Cheddar TV, “We want to provide very stylish apartments in the trendy neighborhoods but at a reasonable price point. The center of Los Angeles, which is the center of stylish and cool, was a great place to start.” (2)
Extended-stay apartments are not new, and StayTony isn’t the only one offering them, but demand for them is apparently growing. Many people in the industry say they’ve become more popular because Airbnb turned the short-term rental into a cool alternative to hotels. Lee Curtis of Corporate Housing Providers Association told the Times, “The big lens shift was Airbnb. It opened up the idea to the world that there are different ways to stay.”
Corporate Rental Market
The corporate rental market is expanding in many cities. Bisnow says, its quite popular in Washington, D.C. where there’s a big need for short-term housing. It mentions several corporate rental firms including the San Francisco-based Zeus Living and the WhyHotel. WhyHotel CEO told Bisnow, “The way we think of it, this represents the beginning of an asset class between multifamily and hotel.” (3)
The corporate rental model is not without opposition however. Some tenant advocates believe that corporate rentals, like vacation rentals, are reducing the stock of long-term units. And cities like Santa Monica, are considering new rules to prevent them. The city council is reportedly considering a 12-month minimum lease and a requirement that leases are only made to “natural persons” (and not corporations).
West Hollywood is also fighting against corporate rentals. It requested a temporary injunction against Korman Communities which offers them. The judge denied the request, but city officials are now considering an annual lease requirement. Korman’s Sean Walsh says, “The city’s position is that everyone who needs a place to stay for less than a year should go to a hotel.”
USC’s Richard Green told the Times, “People sometimes need a place to live for six months too. They are not any less of human beings than people who need to live somewhere for a long time.”
Corporate Rental Business
There could be a battle ahead for corporate rental landlords, but at the current time, there are few rules against them. Of course, you should check your local regulations before you launch into the corporate rental business. But it does appear to be a way that corporate landlords as well as individual landlords may be able to do short-term rentals without local mandates.
One thing to remember — in California, any short-term tenant who rents for more than 30 days automatically gains the rights of a long-term tenant, and the option of remaining there for an extended length of time. Higher rents for corporate rentals could keep that from happening. It’s food for thought, if you want to go in this direction.
(1) LA Times Article
(3) Bisnow Article