Corporate Rental Market Facing Down Extended Stay
<B> Corporate Rental Market Facing Down Extended Stay</B>
By Frank Rosci
Though all-suite, extended-stay hotels have taken the industry and the city by storm, the highly specialized corporate rental market is making a comeback in New York. Whether it's new entrants or well-established companies upgrading their products, business travelers in need of interim long-term housing have a broad range of options.
Differences between the corporate rental market and the extended-stay hotel market are significant, said Oakwood Corporate Housing's director of international communications Robert Philips. "At extended-stay hotels, there are no one-month minimum agreements to sign, but rooms are smaller than in a real apartment. Kitchen size is a big line in the sand, with a kitchenette at an extended-stay property and a full kitchen in a corporate rental apartment. Overall, the atmosphere in an apartment setting is homey and full service, whereas the atmosphere at an extended stay can feel commercial."
Oakwood Corporate Housing of Los Angeles--the largest provider of corporate rentals in the industry--maintains 100,000 units in the United States and worldwide. The company's presence in New York consists of about 300 units in Manhattan and a total of 1,000 units throughout the metropolitan area, said Philips. "With apartments in New Jersey, Westchester County and Connecticut, and with the region's commuter train and transportation links so good, it's fairly easy for renters to commute into the city."
Oakwood's units are fully equipped and are larger than a suite hotel, added Philips. Rates, computed here on a daily basis to give renters a comparison with hotels, are about $150 a day for a studio, $175 a day for one-bedroom apartments and $225 for two-bedroom apartments. Quoted rates include maid service and are 25 percent less than at a comparable hotel, Philips said, adding that the average length of stay in the New York market is 70 days.
"The demand is there, with a tremendous amount of condo development occurring in the city at the high end--space we may be adding to satisfy the market--but the city's real estate market is extremely tight," he said.
"It's a market that didn't exist in the numbers it does today all that long ago, and it's one that continues to expand and strengthen as its providers add hundreds of new rooms and apartments to an inventory that lists thousands of units in the city," said a spokesperson for the New York Convention & Visitors Bureau.
As a result of such a tight market, with demand far outstripping supply for all types of housing, there is very little available for corporate housing companies to increase their inventory, said Frank Laufer, president of Alternative Business Accommodations.
A fairly recent but strong newcomer to the market, New York-based ABA was founded in 1997. "Corporate rentals is a broad-brush term that can include anything from someone's sublet apartment rented month-to-month and perhaps up to six months through a real estate agent--not ideal space for the corporate traveler--to a space perfectly suited to the needs of the corporate business traveler," said Laufer.
ABA's monthly rates are $3,000 to $3,700 for a studio apartment, $3,800 to $4,500 for a one-bedroom apartment and $5,800 to $6,500 for a two-bedroom apartment. Rates have increased about 10 percent in the past two years, Laufer said, but are still 50 percent less than for a one-month's stay in a luxury hotel in New York. The company doesn't charge a broker's fee and hotel taxes do not apply.
"Renters should be careful and always seek an acceptable level of service, so for those who would prefer hotel-type services and greater flexibility of extending their stay, a hotel may be a better choice," Laufer acknowledged.
Amenities at the various rentals can vary greatly, he continued. As part of its standard package, ABA offers housekeeping once per week, a stereo with CD player, two color TVs per apartment, a VCR, fax machine and Monday to Friday newspaper delivery. Consultants comprise a large portion of ABA's market, as do relocating corporate employees, with the average renter staying between 60 and 90 days.
"There is a 30-day minimum agreement to sign that includes utilities, phone, cable and housekeeping, so the units are completely turnkey and renters can move in needing little more than a toothbrush," said Laufer.
Typically, either a security deposit or corporate letter of responsibility is required, and 30 day's notice is expected to extend the stay. All of ABA's units are in luxury buildings that feature a 24-hour doorman, Laufer said, adding that the buildings used by other companies may not offer the convenience and security of a round-the-clock doorman and may be a walk-up with no elevators.
An indication of the strength of the market and how rapidly it's growing is the recent announcement by Manhattan developer Cambridge Development that the vacant upper floors of a 16-story landmark building, at 56 Pine Street in the city's financial district, will be turned into 76 furnished apartments to be called the Cambridge Club.
Rents, including amenities such as maid service, a health club and a business center, will be $2,450 to $3,950 a month. Leasing on the $17 million project is to begin this month. Twenty more apartments will be added in a few years when the lease of an office tenant in the building expires.
Other choices for corporate travelers include the Envoy Club, where renters have a choice of 57 fully appointed alcove studios and one- and two-bedroom suites, said manager Daniel Silva.
"We make a special effort to give our business travelers a competitive edge while on assignment in New York, so we offer such things as cellular phones, personalized business cards, in-room fax machines, well-stocked desks and two-line phones with dataport, voicemail and caller ID. Plus, all suites are wired with ISDN lines for delivery of high-speed, digital Internet access," said Envoy's Michael Rawson, director of operations.
There are separate workstations available at the Envoy, with PCs that feature Internet access. Minimum stay is 30 days and pets are welcome. Monthly rates range between $6,000 and $15,000.
Meanwhile, the Phillips Club at Lincoln Square, a residential hotel, offers 96 long-term units and 92 hotel rooms. Long-term units include full kitchens, restaurant delivery, maid service, VCRs, audio systems and fax machines. Monthly rates are $5,500 to $6,300 for a single room, $6,300 to $9,500 for a one-bedroom suite and $9,000 to $13,000 for a two-bedroom suite.