Aug 7, 2019

San Francisco's next housing battle: Corporate rentals

San Francisco street. Photo: Andia/Universal Images Group via Getty Images

Airbnb this week acquired Urbandoor, a company that provides "corporate rentals" for business travelers and new employees, typically rented for anywhere between a month to a year.

Why it matters: Airbnb, long-acquainted with tensions around home-sharing and short-term rentals, is now stepping into the latest housing controversy in its hometown of San Francisco.

The big picture: Furnished rentals for business travelers are nothing new. But local press reports that startup Sonder has inked a deal to operate most of the rental units in a new building in downtown San Francisco has brought the issue to the forefront.

What they're saying: Critics, including some San Francisco legislators, say that these companies are using a "loophole" in local regulations by having a minimum stay of 30 days to avoid the label of short-term rentals. At the same time, they're marketed as flexible and ideal for renters that only need housing for a few months.

  • “What we need is housing for people who will make San Francisco their home, who will enroll their children in our schools, who will become members of the community," San Francisco Supervisor Hillary Ronen in a statement to the SF Examiner. "Instead, developers are taking advantage of our efforts to streamline and expedite construction, and what does it get us? Not housing, that’s what.”

The other side: The companies argue there's a need for this type of medium-term housing.

  • "Year-long leases aren’t for everyone, including many long-term residents," said a Sonder spokesman to Axios via email. "As society becomes increasingly mobile and demands more flexibility, we believe agreeing to live in one place for twelve months at a time will become a thing of the past entirely."
  • He added that the company only operates in new or adaptive reuse buildings in appropriately zoned neighborhoods.

An Airbnb spokesman told Axios that the company is committed to helping protect affordable housing. Zeus Living, another San Francisco-based corporate rentals startup, did not respond to a request for comment.

Quick take: There's a growing number of renters looking for unconventional lease terms. Case in point, this San Francisco-based reporter received multiple inquiries from people looking for housing for just a few months in response to a recent ad looking for a long-term roommate.

The bottom line: In cities with severe shortages, controversies around housing are deeply emotional and delicate, regardless of whether companies are following local laws.

Editor's note: The story has been updated to correct that Sonder will operate most of the new downtown SF building's units (not that most of the company's units are in that building).

Go deeper

D.C.'s growing low-cost housing gap

Adapted from Turner et. al, 2019, "Meeting the Washington Region’s Future Housing Needs"; Chart: Axios Visuals

The Washington D.C. region already has a severe shortage of affordable housing, and that deficit will widen over the next 10 years, according to a new report out today from the Urban Institute.

Why it matters: The lack of affordable housing means many low-income families, especially renters, have high cost burdens, live further away from their jobs and have long commutes — or end up leaving the region altogether.

  • Without affordable housing, employers have to pay more to attract and retain workers. Washington is the 5th-largest employment market in the U.S., and recent employment has grown fastest in the low- and high-wage jobs.

What's coming: The Washington, D.C. region needs 374,000 additional housing units by 2030, according to the economic growth rate projected by the Metropolitan Washington Council of Governments.

  • 40% of those additional units would need to be in the middle-cost range, and another 38% would need to be low-cost units to match projected needs. Low-income employment is expected to grow faster than the number of high-paying jobs.
  • D.C. Mayor Muriel Bowser has set a goal of building 36,000 new housing units, including 12,000 affordable units, by 2025.

The problem: Overall, the D.C. region's building has not kept pace with its population growth. Since 2010, it has added housing units at only 56% of the rate produced during the 2000s.

  • Most of the region's new housing development has occurred outside of the District of Columbia. And every jurisdiction had shortage of lowest-cost units, according to Urban Institute's analysis.
  • There's also significant competition for the existing low-cost housing units: The report found most households in the lowest-cost units could actually afford to pay more for rent — meaning they're squeezing out the households who really need the lowest rents.

The big picture: Due to the high cost of development in the area, the market doesn't incentivize the creation of more lowest-cost housing units without significant subsidies. But it's unlikely that federal funding for public housing and vouchers will increase anytime soon.

  • Affordability commitments will end for more than 80% of today's affordable units by 2035, raising worries that owners may choose to redevelop it to fetch the market rate when that time comes.
  • Only 6.7% of the region's vacant lots are zoned for multifamily housing.

What's next: Urban Institute researchers recommend that the local governments make targeted investments that preserve existing affordable housing units, while also incentivizing developers to build more in the low- and middle-cost ranges.

Study: California's land-use rules worsen housing crunch

A view of homes and apartments in San Francisco. Photo: Justin Sullivan/Getty Images

Some California cities with stricter land-use regulations had lower growth in housing supply, according to a new paper out today from the Mercatus Center at George Mason University.

The big picture: Cities across the country are wrestling with housing affordability. Minneapolis became the first to scrap single-family zoning, followed by Oregon with the first statewide ban. Meanwhile, Des Moines is moving in the opposite direction with zoning changes aimed at lower density.

Go deeperArrowAug 28, 2019

Juul spends millions to overturn e-cigarette ban in San Francisco

Photo: Bill O'Leary/The Washington Post/ Getty Images

The electronic cigarette company Juul is spending millions of dollars to stop bans on e-cigarette sales in its hometown of San Francisco and other Bay Area communities, reports the San Francisco Chronicle.

The latest: The Vapor Technology Association sued the federal government this week to delay upcoming reviews of e-cigarettes on the market. San Francisco's e-cigarette sales ban started as part of an attempt to crackdown on youth vaping and has quickly spread to surrounding cities, says the Chronicle. The city of Livermore, Calif. passed a ban on July 8.

Go deeperArrowAug 17, 2019