How A New Hospitality Company Is Teaching Developers To Love Short-Term Rentals
Multifamily developers are skeptical of short-term rentals, and for good reason.
Almost 50% of property managers report that short-term stays have occurred in their buildings without their approval, sometimes illegally, compromising the integrity of their buildings. Short-term stays have also led to nuisance issues such as cleanliness or noise complaints from long-term tenants.
As the marketplace for alternative accommodations evolves to help solve many of these pain points, it has become clear that not all short-term stays are created equal.
Marley Dominguez wants to break down the barriers between multifamily property owners and the increasingly popular alternative accommodation industry.
Dominguez is the managing director of real estate for Sonder, a tech-enabled hospitality company that provides boutique living spaces for short- and long-term stays. He argues that a combination of advanced technology and high operational standards are fueling a shift that is improving the experiences of both residents and guests while helping developers exceed their goals.
“We don’t see ourselves as vendors selling a product; we consider ourselves to be investor-tenants,” Dominguez said. “We partner with developers to help them pre-lease their buildings, achieve stabilization and generate higher returns on their investment.”
Dominguez said Sonder was founded with two objectives in mind: to offer travelers flexible spaces that combine the best aspects of a hotel and a home in exciting neighborhoods around the world, while helping developers lease up buildings faster and diversify their tenant portfolio.
Even though demand for housing is not meeting the current supply of available market-rate apartments, an estimated 20,000 new apartments are set to be completed in New York in 2019. With all that new inventory competing for the same tenants, Dominguez believes that developers and property owners could use all the help they can get to lease their buildings.
Sonder signs multi-year leases as the anchor or sole tenant of both existing developments and those that are still under construction. The company outfits units with furniture and hotel-quality finishes and amenities that are managed by Sonder’s on-site staff, from towels to fresh linen delivery, to anything else guests may need, 24 hours a day.
“There’s so much construction happening in the major cities that it has become a real struggle for developers to get apartments leased quickly,” Dominguez said. “We can come in and not only pre-lease some of these spaces, but help reduce turnover and operating costs as well.”
Dominguez recognized that developers may be hesitant to partner with companies like Sonder out of fear that short-term guests will be disruptive to long-term residents.
Sonder takes multiple steps to combat these concerns, Dominguez said, including conducting a four-step background check for every booking, enforcing a good neighbor policy and employing local staff to address any concerns as soon as they arise. Sonder also places NoiseAware products at each property to monitor decibel levels in real time and notify staff when guests are being too loud.
The company employs staff in each city whose job is to ensure that everyone’s needs are met and there are no outstanding issues between guests and tenants. Sonder currently manages more than $2.3B of commercially zoned mixed-use, residential, serviced apartment and hotel assets in cities across North America and Europe.
“The alternative accommodation industry began as a person-to-person marketplace dominated by home-sharing and vacation rentals, but Sonder has turned this concept into a full-stack hospitality business by solving many of the pain points this growing sector has created for developers,” Dominguez said. “We are in the business of making sure towels get folded, rooms get cleaned and issues for guests and residents are avoided at the outset.”
Long-term tenants in buildings with units operated by Sonder are eligible for steep discounts on Sonder rentals for visiting friends and family, one of the perks the company added to help owners attract and retain long-term tenants.
“This is the future of hospitality,” Dominguez said. “The notion that a building can only be one thing is outdated. We’re redefining mixed-use by proving that a multifamily building can be a home, a hotel and a stable asset for developers and investors all at the same time.”
This feature was produced in collaboration between Bisnow Branded Content and Sonder. Bisnow news staff was not involved in the production of this content.