At 16.8 Percent, NYC Among Markets with Highest Penetration of Short-Term Rentals

The short-term rental (SRT) industry will expand to roughly 650,000 actively rented units in the U.S. this year, equal to 12.2 percent of U.S. hotel-room supply, as the fast-growing sector further expands in suburban, rural and resort markets, according to a new report from CBRE. New York City was the second largest SRT market in the U.S. in 2019, having grown 1.8 percent from its 2018 total.

CBRE’s analysis of data on STRs shows that the industry’s growth rate overall is beginning to cool off to an expected year-over-year increase of 19 percent this year, down from 26 percent in 2019 and 39 percent in 2018. Part of that is the effect of growing from an increasingly larger base. Another factor, however, is that some STR growth has shifted outside of big urban markets that are at or near saturation.

STRs typically are houses, condos and unoccupied apartments offered for nightly rent on distribution platforms such as AirBNB or Expedia Group’s VRBO and HomeAway. Many units are listed on multiple platforms, but not all units are available year-round.

“SRTs are now a $115 billion a year industry having penetrated many of the top cities in the U.S.,” said CBRE’s Mark VanStekelenburg. “While the influx of new SRTs may have slowed during 2019, NYC, one of the world’s top tourist and business destinations, is continuing to experience growth in this segment. As a result, traditional hotel valuations without consideration to the STR market are no longer appropriate. We are working closely with our hotel clients to stay on top of the changes affecting their assets.”

CBRE calculates that a market reaches saturation, on average, when its STR supply matches 10 percent to 20 percent of its hotel-room supply. Select markets with substantial tourist draws, like Los Angeles and Miami, can sustain ratios in the high teens and 20s. Of the 30 largest U.S. hotel markets, 14 have STR ratios of 10 percent or more with New York City at 16.8 percent.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.