Sell for More Trivia is a weekly blog series that playfully presents a trivia question about commercial real estate.
What is Corporate Housing?
If you’re going on a three-day work trip, you probably just book a room at a hotel that offers business-friendly amenities.
But for those with jobs that require extended stints in unfamiliar locales, hotels may not be the best choice. They never quite feel like home. And living the hotel lifestyle can get expensive for the business traveler and for the company.
There is, however, another option….Corporate Housing.
Corporate housing is fully furnished, serviced housing available to rent on a temporary basis. All you need to bring is your suitcase and food for the fridge.
You might also hear corporate housing referred to as corporate apartments, executive apartments, serviced apartments, temporary housing or short-term housing.
Average stays in corporate housing are 2-3 months…quite a bit longer than a typical business trip. Many corporate housing providers set minimum stays at 14 days or 30 days.
Then and Now
In the past, corporate housing was a means to provide stable, temporary, housing. But what professionals are looking for in terms of housing types, amenities, and interests has changed drastically over the years.
Today, there is a competitive market for apartment complexes, condo communities and other properties providing corporate housing options.
While there may have been clear lines of delineation between different types of rentals in the past, today these segments blend and intersect in ways that provide ample opportunity for investors.
Short-term and long-term rentals, vacation lodging, and corporate housing used to be separate lanes, but we’ve seen increased competition in the corporate housing market from apartment complexes and condo communities. Even vacation properties are expanding their reach to attract both leisure and business clients.
Traveling professionals engaged in contract work, temporary projects, training programs, and other situations often prefer fully furnished housing that they can rent short-term and with flexibility.
Whether corporate housing, a vacation rental, or another lodging type, these short-term housing solutions provide all of the comforts and amenities of home with the added benefits of flexible lease terms and features that traveling professionals require.
Why Own Corporate Housing?
Both short and long-term corporate housing opportunities can attract high-quality tenants and increase profits for investors who know what they’re doing. Corporate housing may be rented out directly to traveling professionals or to businesses to provide accommodations for employees.
Types of corporate renters might include:
- Military and government employees
- Medical professionals
- Business executives
- Consultants and contractors
- Corporate housing may have higher upfront costs, but typically outpaces long-term monthly rental rates in revenue.
- A high turnover rate allows more opportunity for inspection and routine maintenance, which is good for the longevity of your investment.
- Payment is often handled by the company or booking agent directly and not by the tenant, lowering the chance of rent being short or paid late.
- Generally speaking, corporate renters are respected business professionals that will be reliable, responsible tenants.
- While vacation rentals have seen an increase in regulations like occupancy tax, short-term rentals do not generally fall under the same obligations.
- Marketing vacancies is more of an ongoing process when compared to long-term rental agreements.
- Turnover activity is increased: tenant screening, lease signings, move-out inspections, cleaning, etc.
- Demand for corporate housing can fluctuate with the economy and seasons, similar to the vacation rental market.
The corporate housing segment continues to grow year over year, often outpacing the hotel market. As the COVID-19 pandemic causes remote work to become more widespread across the country, many renters are considering relocating to new cities and states (or already have).
More than 50% of Americans are working from home, and one study shows that 3 of 4 remote workers would continue working remotely given the option. And 2 of 3 would consider moving if given the continued flexibility.
Investors looking for profitable, creative ways to diversify their portfolio should consider the benefits of corporate housing…especially as the new normal is changing. When managed correctly and marketed properly, corporate housing can be a great strategy to increase profits and mitigate loss.
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About Beau Beach, MBA CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 800-721-3287, click to schedule a call or Beau@BeachwoodSells.com