Corporate Housing is on the rise in Denver
Real Estate Report: Corporate housing helps fill a niche for extended and long-term employee stays
Whether they’re considering relocating to a new city or bringing in outside consultants, businesses often find themselves in need of temporary lodging that feels more like a home than a hotel.
That’s the niche filled by corporate housing, a furnished apartment, condominium or house available for rent on a temporary basis for 30 days or more.
“When businesses are contemplating which city they want to move into, cities want to be in the business-friendly state,” AvenueWest CEO Angela Healy says. “It’s not just where are we going to put our company. It’s what kind of transportation is available to our employees? What kind of home prices will they experience when they get there? The corporate housing piece gets forgotten, but they will have a need whether they’re relocating employees or bringing in consultants on assignment.”
An estimated 244,595 U.S. employees from Fortune 500 companies are transferred each year, according to the Corporate Housing Providers Association (CHPA). On average, businesses give their employees 31 days to complete a transfer after it’s been accepted. The technology and professional service industries are the largest generators of corporate housing demand.
For Denver-based software firm Opteamix, which has a subsidiary in Bangalore, India, corporate housing solved the problem of where to put employees who visited the company’s headquarters to work on projects that could last as long as three months, says Anna Hadzi, vice president of operations and company co-founder.
When Opteamix first started in 2012, it put employees in extended-stay hotels, with mixed reviews. So Hadzi started looking for more apartment-style accommodations and found AvenueWest, which has helped Opteamix with its corporate housing needs across the country.
“Hotel accommodation is very expensive. You have per diems, accommodations and transportation,” Hadzi says. “Angela is able to get condos much closer and save money, and we save on transportation when we get units closer to the client site.”
The annual estimated corporate housing room revenue in 2014 was $2.73 billion, and the average length of stay was 96 days, which is substantially longer than other short-term rental housing, according to CHPA.
In metro Denver, one-bedroom units account for about 70 percent of the corporate housing inventory. The units range in size from 3,404 square feet to 4,429 square feet. Two-bedroom corporate housing units range in size from 3,651 square feet to 4,752 square feet.
“Even if you have 10 consultants coming in on a project, you’re going to have 10 one-bedrooms,” Healy says. “They don’t want to stay 30-plus days in a hotel. They want it to feel more like home, especially millennials.”
Reputable corporate housing providers meet certain standards that include everything from furniture to internet service. They also frequently meet standards that include:
- Safety and emergency plans in place with trained staff
- 24-hour emergency lines
- A standardized product regardless of location
- Centralized management with professional offices
- Background checks, security precautions and insurance carried by professional providers
- Clear options for recourse so if a client isn’t satisfied they can be moved to another location
- Compliance with federal, state and local regulations
“If the employee has a terrible experience, they get a bad feeling for the city they’re moving to, they’ll move home,” Healy says. “If there’s a lot of turmoil, then they’re less productive at work.”
With many municipalities cracking down on short-term rental services such as Airbnb and VRBO, AvenueWest works with city councils to ensure they understand the value its service brings to them and don’t run them out of business.
“If a city says no, companies say, ‘Maybe we should look at Salt Lake City instead,’” Healy says. “But as long as we’re doing a 30-plus day stay, we’re governed by the rules of the HOA versus the rules of the city. We can put corporations into those properties. Some areas don’t want nightly stays, so they require a year minimum.”
The demand for corporate housing is seasonal, says Randi Hennigar, owner of Corporate Housing Solutions. Business was good for the company last summer, but as the season turned, business slowed.
“Corporate housing is completely controlled by the housing market, and right now the housing market is stalled,” Hennigar says. “Nothing has moved for months. Because of that, corporate housing is stalled, and it’s scary.”
Even scarier for the industry is the looming presidential election, which Hennigar predicts will negatively impact corporate housing.
“In my 14 years in the industry, there are two things that happen — the dip with the holidays, and people racing to get settled before the school year,” Hennigar says. “Then you also have the presidential election. (This) year will be horrendous. It doesn’t matter what party you support. Wall Street gets skittish because they don’t know who’s going to be president and businesses stop moving. Every four years, we will have our worst year.”