Airbnb, in theory, could ease some cities' opposition to its business by giving landlords a revenue share of their tenants' rentals. It's an interesting idea, albeit with tons of hurdles.
Airbnb Inc., the short-term apartment rental site that’s rankled landlords nationwide, is seeking a reconciliation.
The startup is reaching out to some of the largest U.S. apartment owners with the aim of working out a deal in which tenants can rent out their units through the website — and have their landlord’s blessing. San Francisco-based Airbnb is in early talks with companies including Sam Zell’s Equity Residential, AvalonBay Communities Inc. and Camden Property Trust, according to a person with knowledge of the discussions.
Airbnb, with a $25.5 billion valuation, is surging in urban hot spots around the U.S., making landlords out of people who own no property, and drawing scrutiny from city governments and neighbors. At the same time, it’s growing in popularity with tenants who see the ability to earn significant income from opening their homes to strangers.
“We know it’s taken off like crazy and we don’t want to ignore it,” Kristy Simonette, senior vice president of strategic services for Houston-based Camden Property, said in an interview. “We need to take a look at it and understand what all the opportunities are.”
The company’s talks with the startup’s executives are preliminary and, for now, are mainly to understand the firm’s business model and the role it plays in the multifamily industry, she said.
“There’s so many legalities — this is going to be a long-term thing to see it all play out,” Simonette said. “I have to give them credit: They reached out to the multifamily industry to work through it.”
Any agreement would probably include some kind of revenue sharing, giving landlords a cut of income the tenants earn from renting out their apartments, said Rick Haughey, vice president of industry technology initiatives at the National Multifamily Housing Council. Negotiations would need to reassure owners that they’d have a say over what happens at their properties.
“Right now, they don’t have any control over this situation,” he said. “They don’t have control over how often people are renting their units out, and they don’t have any control as to who’s coming in. They don’t know.”
Partnerships between Airbnb and landlords initially would be limited to markets where the legality of short-term rentals isn’t in question, the person with knowledge of the discussions said. That would rule out New York City for now but possibly include cities that have passed home-sharing regulations, such as Philadelphia; Nashville, Tennessee; and San Jose, California, according to the person.
Christopher Nulty, a spokesman for Airbnb, said the firm is just beginning to discuss ideas with landlords and that “nothing is decided yet and we have no news to announce.” The talks were first reported on Tuesday by the Wall Street Journal.
“It would be news if we weren’t talking to landlords,” Nulty said in an e-mailed statement. “We are committed to working with everyone — hosts, policy makers, community groups, landlords and others — to ensure middle-class people can share their homes and contribute to their communities.”
Zell, chairman of Equity Residential, the largest publicly traded landlord in the U.S., with more than 100,000 units, said Wednesday that Airbnb approached his company and “has had some conversations.”
“I don’t think the overall scale of Airbnb is going to change the multifamily business,” Zell said in an interview on Bloomberg Television.
Jason Reilley, a spokesman for Arlington, Virginia-based AvalonBay, declined to comment on Airbnb.
To contact the reporters on this story: Oshrat Carmiel in New York at [email protected]; Eric Newcomer in San Francisco at [email protected] To contact the editors responsible for this story: Daniel Taub at [email protected] Christine Maurus
This article was written by Oshrat Carmiel and Eric Newcomer from Bloomberg and was legally licensed through the NewsCred publisher network.
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Photo credit: Airbnb is reaching out to landlords in a bid to get permission for their tenants to rent out their apartments through Airbnb. Condosforsalejerseycity.com