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

The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 3

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 | 4

SHORT TERM RENTALS IN AUSTIN, TEXAS

► In the central zip codes of Austin, TX there are 9,021 short term rentals

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Of these, 6,996 take up a full home or unit

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1,882 operate full time (300+ days/year)

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1,553 operate full time and take up a full home or unit.

► The largest proportion of short term rentals are located in East Austin

and the neighborhoods just south of the Lady Bird Lake (SoCo, Zilker, South Lamar).

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This indicates that short term rentals concentrate in high density residential areas

Total Short Term Rentals by Zip Code

1 – 150 151 – 300 301 – 500 501 – 800 801 +

Number of Short Term Rentals

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SHORT TERM RENTALS IN AUSTIN, TEXAS

► The median price of short term rentals in Austin is $150

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This median is the same for entire home, full time short-term rentals

► The most expensive short term rentals in Austin are located in the

affluent West Lake area, where customers are able to rent entire villas and mansions for large groups.

Average Short Term Rental Price by Zip Code

$1 – $150 $151 – $250 $251 – $500 $501 – $750 $751 +

Short Term Rental Price

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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

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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 as a Percentage of Total Full Time/Entire Place Short Term Rentals

0 – 10 11 – 50 51 – 150 151 – 250 251 +

Number of Short Term Rentals

No Data < 7% 7% - 14% 14% - 16% 16% - 20% 20% +

Percent of Total

RENTAL MARKET

The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 8

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

• ffer 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 | 9

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 destination for tech savvy tourists, leading

to growth in tech-driven, short term rental services like Airbnb.

200 400 600 800 1,000 1,200 1,400 1,600 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 $2.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Rental Rate Increase and Short Term Rentals

Total STRs (Entire place, full time) New STRs (Entire place, full time) Effective Rent Per SF 0% 2% 4% 6% 8% 10% 12% 200 400 600 800 1,000 1,200 1,400 1,600 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Multifamily Vacancy and Short Term Rentals

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 | 10

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.

Source: CoStar, RCLCO

$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Rent Growth by Zip Code

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 RENTALS BY ZIP CODE

► South and East Austin have seen the most substantial influx of short term rentals since Airbnb was launched in 2008.

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Growth between 2017 and 2018 was most significant across the board.

100 200 300 400 500 600 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Total Short Term Rentals by Zip Code

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 | 12

SHORT TERM RENTAL GROWTH IN HOT MARKETS

50 100 150 200 250 300 350 400 450 500 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Total AIrbnbs Rent/SF

Rent Growth and Total Short Term Rentals by Submarket

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 | 13

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.

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Short Term Rentals as a Percent of Total Inventory

Inventory Units Total STRs (Entire place, full time) STR Percent

The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 14

SHORT TERM RENTAL PERCENTAGE BY ZIP CODE

► In all zip codes, short term rentals have increased as a percentage of total inventory.

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This is most substantial in “hot” submarkets like East Austin, and established neighborhoods close to downtown like South Austin and West Downtown.

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Short Term Rentals as a Percent of Total Inventory by Zip Code

78701 (Downtown) 78702 (East Austin) 78703 (West Downtown) 78704 (South Austin) 78705 (Campus)

HOTELS

The Impact of Short-Term Rentals in Austin, TX | 9/17/2019 | 16

HOTELS IN AUSTIN TEXAS

► Most hotel deliveries from the last ten years have been close to

downtown, West Downtown, and East Austin

► Almost all recent deliveries have been in areas with high

concentrations of short term rentals

Source: CoStar, RCLCO, Inside Airbnb, Esri

Hotels in Austin, TX New and Future Hotels

Before 1945 1946 – 1985 1986 – 2000 2000 – 2010 2010 – Present Future

Year Built

Post-2008 Future

Year Built

AUSTIN LA ORLANDO DC

221 W 6th St Suite 2030 Austin, TX 78701 11601 Wilshire Blvd Suite 1650 Los Angeles, CA 90025 964 Lake Baldwin Ln Suite 100 Orlando, FL 32814 7200 Wisconsin Ave Suite 1110 Bethesda, MD 20814

Todd LaRue, Managing Director P: (512) 215-3157 E: tlarue@rclco.com W: RCLCO.COM