Airbnb has called the city’s new short-term rental law a “de facto ban” on its platform. It’s also been hailed as a major win for the hotel industry. In both cases, the truth is not quite so extreme.
The law is not a ban on short-term rentals, but it does place restrictions that could be deal breakers for some hosts. Only two guests are allowed at a time, hosts are required to be present when the property is being rented, and all interior doors must be unlocked, giving guests access to the entire unit.
Hosts that meet those requirements must apply for a permit from the city. As of Aug. 28, about 3,250 hosts had applied for registrations. The city had approved just 257.
The law is expected to remove about 4,000 short-term rentals from the market. To put that into perspective, there were about 23,000 active listings on sites like Airbnb and Vrbo before the law went into effect.
So, the restriction will undoubtedly harm the market for short-term rentals. But is it accurate to call it a ban? I think not.
The restrictions come at a time when NYC’s tourism market is flourishing. The city is expecting over 63 million travelers in 2023, and nearly 90 percent of hotel rooms are occupied each night. With reduced supply due to the Airbnb restrictions, hotels are likely to have increased pricing power, and room rates are expected to rise.
But there’s a caveat.
The city is expected to add 10,000 new hotel units by the end of the year, more than enough to make up for the loss of Airbnbs.
The real change in pricing power is expected in the coming years. That’s because applications for new hotel developments have plummeted to near zero since the city passed a law requiring developers to get a special permit to build new hotels.
When the development pipeline dries up, hotel prices — for room rentals and sales — could spike. But that could be a couple years out.
In the meantime, expect the hotel industry to remain mostly unchanged.
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What we’re thinking about:
Like a lot of New Yorkers, I’ve always lived in neighborhoods mostly devoid of hotels. So, I’ve appreciated that Airbnb allowed my friends and parents to stay close by when they visit me. When your friends or family visit you in the city, where have they typically stayed? Hotels? Or Airbnbs? Send a note to david.westenhaver@therealdeal.com.
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Closing Time
Residential: The priciest residential closing Friday was $3.2 million for a condo at 101 Leonard Street in Tribeca.
Commercial: The most expensive commercial closing of the day was $5 million for a three-story, five-unit building at 413 South Fifth Street in Williamsburg.
New to the Market
The priciest residence to hit the market Friday was a townhouse at 110 East 70th Street in Lenox Hill asking $27.5 million.
Breaking Ground
The largest new building filing of the day was for a 4,201 square-foot, two-story residential building at 2848 Faber Terrace in Queens. Gerald Caliendo Architects filed the permit application.
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A thing we’ve learned: Is New York fully back from the depths of the pandemic woes? Everyone has their own answer to the question and their own metrics as to what will officially signify a full and healthy recovery. Former Mayor Michael Bloomberg has finally seen the indicator that matters most to him: restaurants are too loud. Congrats, Mr. Bloomberg.
What about the rest of you? Is the city truly back? What’s your indicator?
Elsewhere in New York
— Mayor Adams plans to spend billions to remedy the city’s mounting migrant crisis. But many of the companies on the receiving end of that spending have questionable histories, according to The City. Comptroller Brad Lander rejected a city contract with DocGo, a company that provides shelter for migrants, arguing that the company lacked the relevant experience to justify a $432 million contract. Lander and others have raised questions about at least two other contracted firms.
— Hurricane Lee is hurtling up the eastern seaboard. The storm is expected to weaken into a tropical storm before making landfall in Maine and Nova Scotia. New York City is at some risk of extreme weather as a result, the New York Times reported. But the city should sit outside of the tropical storm’s wind field. Deep Long Island, starting around Brookhaven, is expected to experience some tropical storm conditions, according to the National Hurricane Center.
— Staten Island is getting a new $400 million waterfront park courtesy of the city. The park, which is expected to follow a similar design to the Upper West Side’s Riverside Park, will run along the island’s North Shore from the Bayonne Bridge to the Verrazano-Narrows Bridge. The project is part of an attempt by the city to attract new investment to the oft-forgotten borough, with targets set at attracting 8,000 new jobs to the area, the New York Post reported.