UPDATED, Aug. 19, 10:10 a.m.: Short-term rental operator Domio is expanding to South Florida, The Real Deal has learned.
The New York-based startup paid about $1.45 million to lease 45 units at the beachfront Monte Carlo at 6551 Collins Avenue in Miami Beach, co-founder and CEO Jay Roberts said. Domio, a technology and hospitality company that aims to profit from managing and operating short-term rentals, is also inking deals at Miami Worldcenter, in Wynwood and in South Beach.
“Homesharing in larger Airbnb properties is usually illegal in Miami Beach. Domio is opening the legal supply,” Roberts said.
The firm signs leases that typically range from five years to 10 years. It’s expanding to Fort Lauderdale, Palm Beach, Tampa and Orlando. Domio has about 2,000 rooms currently in its portfolio, the bulk of which are in Chicago and New Orleans, Roberts said. Last year, it acquired Chicago-based Reserve Rentals for about $1.4 million.
The North Beach deal at the Monte Carlo is for five years and includes furniture. Samuel Raccah of the Red Group arranged the deal. Mare Azur Miami sold the leases.
Built in 2014, the 20-story Monte Carlo has a total of 136 apartments. Domio will use its in-house design and creative team to update the units at the Monte Carlo, Roberts said.
The city of Miami Beach has cracked down on illegal short-term rentals with high fines, making the legal properties attractive to investors.
Roberts said Domio’s goal is to build a travel hospitality brand with a network of properties in the U.S. and around the world. It opened its first apartment-hotel in New Orleans earlier this year, and eventually plans to open more in other markets. Individual unit owners and smaller companies lack consistency, he added.
“Customers are looking for brands to take care of them and they’re tired of staying in an amateur home,” Roberts said.
Raccah, whose Red Group operates short-term rentals in Miami, expects to see more companies like Domio expand in South Florida. Competitors include Sonder, a San Francisco-based startup, which recently closed on a $210 million funding at a $1 billion valuation, and Stay Alfred, a short-term rental operator with two locations in South Florida.
“Multifamily developers, real estate owners and lenders are getting more familiar with master-leasing multifamily buildings to short-term rental operators,” Raccah said. “It ensures that your building stays occupied throughout the year.”
Last year, PMG brought on the Guild Hotels, a tech-oriented, boutique hotel group, to lease a portion of units at X Miami, 32-story, 464-unit apartment building in downtown Miami.
Raccah said that if developers continue to lease out a portion of their units to companies like Domio, the supply will shrink and rents will rise.
“The four big [short-term rental operators] are looking at Miami as an opportunity, particularly because Miami will be hosting the Super Bowl. All want to have a lot of inventory ready for the 2020 Super Bowl,” he said.