As workers increasingly move to suburbs, high housing prices and limited supply might delay a home purchase. Regulations aimed at vacationers shouldn’t limit extended-stay rentals.
This article originally appeared in Smart Cities Dive. Find it here.
By Angela Healy
Five years ago, businesses such as McDonald’s and General Electric made a strategic decision to move their headquarters closer to metropolitan areas. Often, this required shifting from large, spread-out campuses where employees drove to work to more compact office spaces that were near public transportation. The rationale? They wanted to be better positioned to uncover and attract top millennial talent, which often was based in major cities.
Today, companies are shifting leasing decisions to more closely mirror their employees’ growing preference for the suburbs, which often provide a shorter commute and more walkable destinations than central cities. For example, Atlanta has seen a shift in company preference for office leasing locations, with one-third now choosing suburbs over urban cores, and co-working facilities such as WeWork, Industrious, Daybase and Codi are increasing their investments in suburban real estate.
Populations also shifted in other ways during the pandemic, moving from large cities to medium and growing metropolitan areas such as Huntsville, Alabama; Salt Lake City; Nashville, Tennessee; and Charlotte, North Carolina. Some lower-population states, including Vermont, and cities such as Tulsa, Oklahoma, started to offer incentives to lure W-2 and self-employed workers to their regions.
As people look to relocate, they are encountering a residential real estate market that has experienced both record-high home prices and record-low inventory. As a result, it has become increasingly difficult for individuals to purchase a home regardless of location, causing many to delay a home purchase or a move.
To truly reap the benefits of these transformational business shifts, local government leaders and economic planners must recognize the importance of supporting relocating employees. Corporate housing is one key component of the equation.
Investments in and favorable regulations surrounding corporate housing are essential to attract and retain business investments. With the growth of short-term vacation rental properties over the last decade, many cities have preemptively put restrictions on short-term rentals in suburban and metropolitan areas alike. Why? Neighborhoods are often fearful of a transient population turning over weekly, if not nightly, and local ordinances want to ensure favorable tax and regulatory control over this income.
Residents also worry about short-term rentals’ impact on the availability of affordable housing. That’s a real concern, but corporate housing is very different from what the general public will associate with a short-term rental. My company’s properties traditionally house individuals and families, on average, for 60-plus days, and these properties have very specific requirements that traditionally do not compete with affordable housing properties. People using corporate housing live and work in the local communities, and they are active participants and contributors to the local economies.
Unfortunately, extended-stay rentals — those over 30 days and often used by families and business professionals — have become grouped into the short-term rentals affected by such restrictions. In many areas, these types of rentals have been blocked or highly regulated, making it nearly impossible to provide corporate housing options for individuals and families. Corporate housing is an attractive and needed option also for families and individuals displaced by insurance claims, traveling for medical reasons, or relocating for personal reasons and struggling to find a permanent home. Differentiation is needed so that corporate housing is not unnecessarily restricted.
In the years ahead, businesses will continue to be laser-focused on supporting employee retention and enabling robust recruiting efforts. The availability of ready, comfortable “homes away from home” is a critical component that business leaders will seek out when weighing new work locations. Cities should recognize the importance of providing a robust inventory of corporate housing options as an investment in their own economic growth.
Corporate housing can be a competitive advantage for leaders competing to bring new businesses to their regions. Regulations that are shortsighted, and that confuse corporate housing with short-term housing, will only prevent this growth and the ability to attract families to communities.