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I recently read that in addition to “regular” housing (apartments, condos, single family homes) being used as by-the-night or by-the-short-period-of-time housing (a la hotels, B&Bs, hostels, etc.) through services such as Air B&B, VRBO / HomeAway, etc., suites / long term stay hotels in areas of certain very busy cities are being used as corporate housing with most of the units being used by people staying for a summer (interns, for example) — to the point that it becomes difficult to get a room for by-the-night at that hotel, and if you do, you can’t make use of any of the benefits of staying in a hotel (something wrong with your room? We’ll switch you to another. Rollaway microwaves, fridges, etc.). There are also instances of things like the Travelodge on 8th becoming a dorm for a college, then being purchased by Amazon and used by Mary’s Place as a family shelter.
While R. likes to mention that he has stayed in corporate housing on the east side when working at DECwest (condos rented by DEC and then supplied to traveling employees who would be staying for several days or more), that is really an example of just how poor the supply of hotels was back in the 1990s on the east side — and how rare facilities like Residence Inn, Homewood Suites, etc. with full cooking options were back then _everywhere_. Because the market wasn’t supplying it, the corporation cobbled together a solution, and housing (at least condos) as a market on the east side back then wasn’t too tight to make it work out.
R. also likes to mention that a HoJo’s and later a Hyatt were used for years (maybe decades) as dorms in Boston / Cambridge before reverting the hotels they were originally intended as. I would argue that was a straightforward case of overbuilding hotels and underbuilding dorms.
There is always some flexibility across the housing spectrum. Mansions on Cap Hill converted to triplexes (or more units), then back converted to mansions. Bungalows turned into professional offices (law, medical / dental). Restaurants popping up in absolutely anything, but really frequently in housing. The two major causes are way too much building space (that leads to combining units, and marginal uses getting really nice digs), way too little building space (that leads to splitting units, and marginal uses being unable to get any space at all), and incorrect mix. I’m puzzled by the idea that one could simultaneously see conversion of by-the-year leased / purchased housing to by-the-night(s) housing AND by-the-night(s) housing converted to by-the-large-fraction-of-a-year housing. Seattle has seen a ton of conversions from apartments to condos when condos were in demand and apartments were on the way out, and a ton of conversions from condos to apartments when the financial crisis hit. What you don’t see is both directions at the same time.
I’m _assuming_ that what is going on is convergence of pricing across markets that have historically maintained separate pricing. Here’s the short form of my theory: hotels in Seattle post crisis focused on raising their RevPAR, and they got really good at that for a variety of reasons. Regulators helped out by making it hard to build more hotels. The economy helped out by creating lots of reasons for people to travel to Seattle. This made it actually tempting for people to start mooching some of that cash by renting out space in housing. AirB&B made that easy. The safety valve provided by AirB&B and similar meant that RevPAR quit going up, so it was hard for hotel builders to justify building more hotels either on an investment basis OR to regulators who have their own reasons for not wanting overbuilding in hotels. The income to landlords via AirB&B became steady enough and high enough to meaningfully exceed renting by-the-month / by the year, and created pressure on that market, again, aided by lots and lots of competition to lease those units for any length of time and again, regulators trying to slow everything down, either to please their constituents who were already unhappy about traffic / influx of new people or because of concerns about what happens in the next bust if overbuilding happens (something Seattle regulators NEVER forget).
Hotels and leased housing are thus essentially — in certain parts of Seattle anyway — acting as a unified market, with the rate set by the _hotel_ rate (ETA: RevPAR, not rack rate. Not discounted rate. RevPAR.). Normally, in this sort of situation, renting would be so expensive that buying would make sense. However, regulatory limits and geographical limits on building new housing for purchase have combined to keep _that_ housing (for purchase housing) escalating more or less just ahead of all rent increases.
I know everyone in Seattle is pretty happy that enough apartment buildings have come online that rental increases have slowed. But things are not going to be recognizably like Elsewhere until there is enough slack in the hotel supply to drop RevPAR. That’s what I’m predicting, anyway. It might never happen — Seattle could just basically act like NYC and other places where finding an affordable hotel room is basically impossible, for the indefinite future.
This could turn into a link fu post, if I find anything interesting. Feel free to send me things, or include them in the comments. I’m not looking for screeds and I’ll delete anything that is Being Mean to Homeless People, or just plain mean.
ETA: Tech Crunch article about the startup space around shared housing / co living:
https://techcrunch.com/2018/05/19/shared-housing-startups-are-taking-off/
Really long New Yorker piece mostly about Common, haven’t finished reading it yet:
https://www.newyorker.com/magazine/2016/05/16/the-rise-of-the-co-living-startup
While R. likes to mention that he has stayed in corporate housing on the east side when working at DECwest (condos rented by DEC and then supplied to traveling employees who would be staying for several days or more), that is really an example of just how poor the supply of hotels was back in the 1990s on the east side — and how rare facilities like Residence Inn, Homewood Suites, etc. with full cooking options were back then _everywhere_. Because the market wasn’t supplying it, the corporation cobbled together a solution, and housing (at least condos) as a market on the east side back then wasn’t too tight to make it work out.
R. also likes to mention that a HoJo’s and later a Hyatt were used for years (maybe decades) as dorms in Boston / Cambridge before reverting the hotels they were originally intended as. I would argue that was a straightforward case of overbuilding hotels and underbuilding dorms.
There is always some flexibility across the housing spectrum. Mansions on Cap Hill converted to triplexes (or more units), then back converted to mansions. Bungalows turned into professional offices (law, medical / dental). Restaurants popping up in absolutely anything, but really frequently in housing. The two major causes are way too much building space (that leads to combining units, and marginal uses getting really nice digs), way too little building space (that leads to splitting units, and marginal uses being unable to get any space at all), and incorrect mix. I’m puzzled by the idea that one could simultaneously see conversion of by-the-year leased / purchased housing to by-the-night(s) housing AND by-the-night(s) housing converted to by-the-large-fraction-of-a-year housing. Seattle has seen a ton of conversions from apartments to condos when condos were in demand and apartments were on the way out, and a ton of conversions from condos to apartments when the financial crisis hit. What you don’t see is both directions at the same time.
I’m _assuming_ that what is going on is convergence of pricing across markets that have historically maintained separate pricing. Here’s the short form of my theory: hotels in Seattle post crisis focused on raising their RevPAR, and they got really good at that for a variety of reasons. Regulators helped out by making it hard to build more hotels. The economy helped out by creating lots of reasons for people to travel to Seattle. This made it actually tempting for people to start mooching some of that cash by renting out space in housing. AirB&B made that easy. The safety valve provided by AirB&B and similar meant that RevPAR quit going up, so it was hard for hotel builders to justify building more hotels either on an investment basis OR to regulators who have their own reasons for not wanting overbuilding in hotels. The income to landlords via AirB&B became steady enough and high enough to meaningfully exceed renting by-the-month / by the year, and created pressure on that market, again, aided by lots and lots of competition to lease those units for any length of time and again, regulators trying to slow everything down, either to please their constituents who were already unhappy about traffic / influx of new people or because of concerns about what happens in the next bust if overbuilding happens (something Seattle regulators NEVER forget).
Hotels and leased housing are thus essentially — in certain parts of Seattle anyway — acting as a unified market, with the rate set by the _hotel_ rate (ETA: RevPAR, not rack rate. Not discounted rate. RevPAR.). Normally, in this sort of situation, renting would be so expensive that buying would make sense. However, regulatory limits and geographical limits on building new housing for purchase have combined to keep _that_ housing (for purchase housing) escalating more or less just ahead of all rent increases.
I know everyone in Seattle is pretty happy that enough apartment buildings have come online that rental increases have slowed. But things are not going to be recognizably like Elsewhere until there is enough slack in the hotel supply to drop RevPAR. That’s what I’m predicting, anyway. It might never happen — Seattle could just basically act like NYC and other places where finding an affordable hotel room is basically impossible, for the indefinite future.
This could turn into a link fu post, if I find anything interesting. Feel free to send me things, or include them in the comments. I’m not looking for screeds and I’ll delete anything that is Being Mean to Homeless People, or just plain mean.
ETA: Tech Crunch article about the startup space around shared housing / co living:
https://techcrunch.com/2018/05/19/shared-housing-startups-are-taking-off/
Really long New Yorker piece mostly about Common, haven’t finished reading it yet:
https://www.newyorker.com/magazine/2016/05/16/the-rise-of-the-co-living-startup