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Landlords filling vacancies via corporate deals that guarantee occupancy

Temporary housing is notoriously competitive in the summer, and may be more common as new high-rises compete to fill vacancies.

Some city landlords are seizing on multiyear lease

Some city landlords are seizing on multiyear lease deals from corporations to guarantee occupancy during the high-turnover summer season. Photo Credit: Getty Images / Spencer Platt

Even landlords are gearing up for a summer fling.

For years, the market for shorter-term housing has been particularly lively in the summer, when students and interns come for seasonal stints and when temporary arrangements are sought by recent college graduates and employers opting to relocate when their children are not in school.

The seasonal occupancy may be particularly widespread this year, seasonal housing providers said. Some landlords have a fair amount of vacant apartments and are interested in whittling down that number by partnering with companies that lease units for 30 days or more.

“During this winter, they all of a sudden came to us and offered us units. Even if they have one or two months of vacancies, it’s not worth it for them,” said Eli Moyal, managing partner of Big Apple Living, which rents corporate apartments for $3,500 or more a month, and shared apartments for students and young professionals, starting at about $1,000 a month per person, with a three-month commitment. “We take the lease for two, three, four years — zero vacancy.”

Like most of its peers, Big Apple Living offers property owners assurance that apartments it is handling under multiyear agreements will be paid for, regardless of whether they are occupied.

That stability has been welcome, particularly in parts of the city where landlords are seeing several new residential buildings debut, according to Michael Tortorici, executive vice president of investment sales at Ariel Property Advisors.

“Right now the priority for most landlords, again this is specific to these high-rise luxury buildings that are popping up, is getting them leased as soon as possible,” Tortorici said. “This is a great solution.”

Although landlords could lose out if rents shoot up and they are locked into multiyear agreements at lower rates, seasonal providers can help buildings capitalize on the summer crush, according to Zach Ehrlich, who founded Stoop — a roughly year-old firm with 100 bedrooms, which start at $1,000 a month. Stoop is planning to expand its inventory, in part, by managing a building undergoing a gut-renovation in Fort Greene, and another in Ridgewood.

“There’s unbelievable revenue to be earned from shifting their inventory,” Ehrlich said. “The typical apartment comes out on the market now, in April, and it’s rent for the next 12 to 24 months is largely driven by what went on in the market today. ... Really that price of that apartment or bedroom should have some kind of yield in summer that’s different from the fall.”

Others in the industry were less optimistic about a vacancy-fueled boom. Frank Laufer, president of Alternative Business Accommodations, said the vacancy rate had not grown enough to impact his firm, which rents out about 300 apartments in the metro area for roughly $4,000 to $7,000 a month.

After 20 years in the industry, Laufer said Alternative Business Accommodations has already hit the maximum number of corporate apartments allowed in buildings. He noted that many new residences did not want to work with seasonal housing providers because they believed it could jeopardize their 421-a tax abatements.

Similarly, Craig Partin, chief sales officer at Furnished Quarters, said growth has been limited by caps on corporate apartments in many higher-end buildings.

“Yes, there is a little bit larger appetite, but in New York City people start talking about a softer market when it goes from a 2 percent vacancy to 2.5 percent — as if that’s some sort of giant difference,” Partin said.

Many seasonal housing businesses were careful to distinguish themselves from Airbnb and other platforms that facilitate leases for under 30 days, which is only allowed in apartment buildings when the tenant is present while hosting guests.

Sarah Watson, deputy director at the Citizens Housing and Planning Council, said the think tank determined there was little valid research on how Airbnb and seasonal housing impacts the market. But Watson said it would make sense to examine these industries and gauge and plan for their demand, rather than allowing it to be met without much regulation in the traditional housing market.

“There’s not really a good regulatory response yet to accommodate these more in-between uses,” Watson said.

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