Would your employer rent you a furnished apartment?
If you are renting a luxury apartment in San Diego, there’s a chance your neighbor’s rent is paid by their employer.
The region, and the nation, has seen an increase in corporate housing where employees are given furnished apartments for short stays in the newest high-end apartments, like Form 15 and Pinnacle on the Park in San Diego. Job relocation, internship programs and special projects are some of the main reasons for corporate housing — but the industry is growing in other ways, too.
Companies say an increasing number of people are seeking out furnished apartments when moving to new cities to avoid the traditional hassle of a 12-month lease and a hefty IKEA bill.
From 2016 to 2017, revenue for the industry increased 12.9 percent, or $3.62 billion, said industry analyst Highland Group, which researched data from the Corporate Housing Providers Association.
The San Diego metropolitan area saw the second-highest increase in average daily rent of the 57 metro areas studied. The average daily rent was $183 in 2017, up from $136 the previous year. That’s a jump of 35 percent. (San Antonio was ranked No. 1 with a 61 percent increase.)
A major reason for price increases is not just changing consumer preferences, but the surge of new apartment buildings. The San Diego region has seen more and more rental housing built, especially downtown, that is priced much higher than everything else on the market. Because corporate housing providers often sign 12-month leases at the newest buildings, their daily rental rate increases in kind.
Roughly 60 apartment complexes in San Diego County feature corporate housing, but the number of units can vary wildly given the time of year or if there is a special event, like Comic-Con International.
While corporate housing has been a staple of the rental market for a while and is not a new concept, it’s consumers and businesses that are changing, said Alex Chatzieleftheriou, CEO of corporate housing startup Blueground.
“People’s expectations are changing,” he said. “We see that people have become increasingly spoiled from tech services, from using Uber to get a car, or when they are using Amazon to order a product. They expect a similar experience when they rent an apartment and move to a new city.”
Blueground started in Greece in 2013, but has been hiring more employees and expanding across the United States. It recently launched in Los Angeles and has been considering San Diego as part of its expansion plans.
Chatzieleftheriou said one of the things that has given them confidence in growth is technology that makes renting an apartment easier. He said Blueground’s mobile app, for example, allows consumers to quickly and easily swipe for a new apartment. Also, Chatzieleftheriou said the younger generation is moving away from their parents’ and grandparents’ attachment to furniture, which makes furnished apartments more desirable.
“It’s a more seamless experience,” he said.
How it Works
Furnished housing isn’t always the best option for an individual because it costs more than a traditional apartment and — depending on the time of year — can cost more than a hotel.
Allan Talusan, marketing director for National Corporate Housing, said businesses prefer corporate housing for employees because it feels more like they are at an actual home — instead of a sterile hotel room — and avoids the uncertainty of a vacation rental.
“If you’re there for work, you realize that staying night after night at a hotel — sitting on the bed watching TV — is not the best way to decompress,” he said. “Short-term furnished apartments are the sweet spot of corporate housing.”
National Corporate Housing has rooms in 30 complexes in San Diego County and Talusan said a lot of its business comes from intern programs for people who might need a room for only a few months, traveling nurses programs and special events — like a Super Bowl — where a lot of a company’s workers need to relocate for a few weeks.
It can be cheaper than a long-term stay at a hotel, but not always. Hotel industry watcher STR said average daily rate at a hotel in downtown San Diego so far this year ranged from $136 for midscale to $246 for luxury. Right now, National Corporate Housing’s daily rate ranges from $139 to $189 a day in downtown.
Corporate housing providers say one of the benefits they have over a hotel is the room rate is set for the length of the lease. Hotel rates can change quickly based on the day of week or special event.
Corporate housing potentially means more profit for that room than a building owner could have gotten with a traditional tenant. For instance, average monthly rent at Vantage Pointe downtown is $2,955 (about $97 a day), according to CoStar, but National Corporate Housing charges $139 a day.
Providers of corporate housing typically sign 12-month leases. Landlords love it because the room gets rented out and business travelers tend to be the ideal tenant, said Amy Guerin, director of sales for PC Housing.
She said all their tenants are pre-screened so there are no surprises for the landlord.
“Our clientele is a different caliber,” Guerin said.
Nationally, the biggest reason for corporate housing in 2017 was work relocation (33 percent), said Highland Group. It was followed by special projects, 21 percent, and a large catch-all category of “other” reasons at 19 percent. Ten percent of stays were for emergencies; 9 percent for government or military; and 8 percent for interns.
Four months ago, Gabriel Sidauy came to San Diego County from Mexico City with his family so his wife could undergo medical treatment at UC San Diego. Considering it was summer, prices were very high at nearby hotels and even vacation rentals on Airbnb.
Sidauy, 36, said he eventually found out about PC Housing while trying to find a place to live for his family, which includes two children under 5 years old. His requirements were specific: Being as close as possible to his wife’s treatment and a synagogue.
PC Housing placed them at Regents Court Apartments in University City, which has plenty of amenities, including a business center, clubhouse, gym and spa.
“We weren’t sure if it was going to be one month or three months or 10 months. A hotel was not an option for that,” Sidauy said. “We were with our kids so we needed a place to cook breakfast and everything.”
The San Diego Market
Traveling artists don’t always have the best housing options, from couches to a friend’s floor.
That’s why Brooklyn playwright Mike Lew was pleasantly surprised when he came to La Jolla Playhouse to produce his play “Tiger Style!” in summer 2016. He and his wife, fellow playwright Rehana Lew Mirza, and their son, less than a year old at the time, were provided a furnished apartment by the playhouse for roughly two months.
“It was just a relief,” he said. “La Jolla (Playhouse) went out of their way to provide things like a crib.”
Lew said one of the reasons people who act and produce plays fall out of the industry, especially when they start having kids, is a lack of housing while traveling.
Mark Skinner, author of the Highland Group report, said he expects growth in the market as long as job growth continues and corporate housing providers continue to get big returns.
People using corporate housing in the San Diego metropolitan area stayed an average of 61 days in 2017, said Highland Group, using a sample size of 350 apartments. That’s slightly less than the nationwide average of 78 days.
The average vacancy rate for corporate housing in metro San Diego was 14 percent, much higher than for a normal apartment. The vacancy rate for San Diego County apartments was around 4.3 percent in the third quarter, said real estate tracker CoStar.
Highland Group said the majority of San Diego corporate housing was for one-bedroom units (46 percent) and two bedrooms (47 percent). There were no studios used and three-bedroom apartments made up 6 percent of units.
The main corporate housing companies in the region are Weichert Corporate Housing, National Corporate Housing, PC Housing, Oakwood and Corporate Housing by Owner. Most apartments are in University City and downtown, but there are also units in Mira Mesa, Otay Ranch, Mission Valley and other markets.
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