Nashville Bits and Pieces

[PaulChinetti]

Airbnb stays always fluctuate with the economy. The lower numbers make more sense in my experience. 

[Nathan_in_DC]

4 minutes ago, samsonh said:

These are incredibly incorrect numbers.  Please see this tweet for correct numbers. 

 

 

Always be careful when a data source is a doomer account selling something. 

On the other hand, Jamie Lane works for a consultancy firm for people investing in vacation rentals, and pulls his data from that firm. Neither are exactly what I'd call objective third-party assessments, though I'm inclined to believe that STRs are in more trouble than his firm would like their customers to believe.

[samsonh]

Just now, Nathan_in_DC said:

On the other hand, Jamie Lane works for a consultancy firm for people investing in vacation rentals, and pulls his data from that firm. Neither are exactly what I'd call objective third-party assessments, though I'm inclined to believe that STRs are in more trouble than his firm would like their customers to believe.

And he shows numbers down slightly, which makes sense. It makes zero sense for Nashville's numbers to be down 39% when airport passengers are at an all time high and the economy is incredibly good. Does not pass the sniff test. 

[jmtunafish]

50 minutes ago, smeagolsfree said:

 

This helps explain some. The big reason is supply is outpacing demand. Too many people think they can make a quick buck off of a house they poured their life savings into and now the birds are coming home to roost. The article below is stating too that a lot of people that got into AirB&B over the last couple of years are upside-down because they paid too much, and they have a high interest rate. I also have a theory that some of these owners are just A-Holes with outrageous demands for their guest. I would never stay in one simply because I am not going to take out my own garbage, clean my own sheets and dishes. Thats why I stay in hotels. When it is all said and done the price for the most part is cheaper, and I don't have some idiot owner looking over my shoulder. 

This will force a lot of these people to sell their homes. Now one of two things will happen. Corporate buyers will come in and low ball them and hurt the market or normal buyers will come in and it will help ease the housing crisis in cities like Nashville and Ausitn. I have no sympathy at all for price gouging. That is what a lot of these people do. They build home in crappy sections of town and rent to unsuspecting tourist thinking they are in safe areas and charge them out the wazoo for a home that is not really safe. These AirB&B apartments are going to be trouble as well, but they may lower their rents to rent to normal long-term renters and lower the average rent in town.

Airbnb Revenue Collapse Sparks Housing Market Crash Fears (newsweek.com)

Why Airbnb owners are about to Sell (reventure.app)

I totally agree.  I used airbnb all the time when it was still fairly new, and back then it really was cheaper than hotels particularly for extended stays which usually included some generous discounts.  I didn't mind washing the sheets and taking out the trash if it meant saving a couple hundred bucks over a hotel.  But lately, airbnb is almost always more expensive than hotels because of all the added fees that airbnb owners tack on and which aren't included in the advertised nightly rate.  It's ridiculous.

[SoundScan]

3 hours ago, samsonh said:

And he shows numbers down slightly, which makes sense. It makes zero sense for Nashville's numbers to be down 39% when airport passengers are at an all time high and the economy is incredibly good. Does not pass the sniff test. 

Not only that, but the "collapse" data doesn't make sense within the context of ABNB corporate revenue growth in the NA region and forward earnings guidance. -45% revenue collapses in major U.S. markets would be akin to another pandemic-level catastrophe for them. Based on ABNB's own reporting, a slight drop in per-listing revenue makes sense, with new listing growth slightly outpacing revenue growth in the U.S. 

Edited June 28, 2023 by SoundScan

[Pdt2f]

On 6/28/2023 at 9:05 AM, jmtunafish said:

I totally agree.  I used airbnb all the time when it was still fairly new, and back then it really was cheaper than hotels particularly for extended stays which usually included some generous discounts.  I didn't mind washing the sheets and taking out the trash if it meant saving a couple hundred bucks over a hotel.  But lately, airbnb is almost always more expensive than hotels because of all the added fees that airbnb owners tack on and which aren't included in the advertised nightly rate.  It's ridiculous.

I despise STR’s. The only reason I ever use them is if we’re taking a big family vacation to a beach, because it’s really the only way you can get a beachfront place with room for 10+ to sleep. 
 

I never understand why the platforms allow them to get away with such dishonest pricing. Saying it’s a certain amount per night, and then tacking on hundreds of dollars in “owners fees” or some such nonsense is insane. And I’ve yet to figure out why I have to both pay a housekeeping fee AND wash the sheets, dishes, etc. TBH after a housing search last year with prices inflated and availability decreased due to STR investors buying up everything, and dealing with the dishonest pricing, I hope they all lose their shirts in this. 

[chc3]

In Europe, Airbnb is a much better deal. I’ve stayed in major cities like Lisbon for $100 per night, all in. I never check bags so I need a washer when I’m gone for weeks. In the USA, I agree they’re often a ripoff.

[KJHburg]

I am an Airbnb host in Hilton Head.  I have been renting my condo there for 10 plus years on Airbnb and 20 years in total.  The reason revenue per rental is going down all over is just the explosion of available short term rentals.   Everyone thinks they can do it.   The fees they tack on by Airbnb are theirs and Airbnb recently made their prices more easy to see with any cleaning costs or extra charges.  Taxes they must collect are then added on.   Many people assume Airbnb owners are just rolling in the cash and it is easy.  Far from it!  Most do it for the extra money or like me have done it for years before Airbnb even existed.  I do have a cleaning fee that is added and it is same at my condo whether you stay 2 nights or 14 nights.  Unfortunately that is just the way it is.  My average stay is 7 days due to my own restrictions and have many monthly stays as well.  In a major tourist city like Nashville they have grown everywhere I am sure into neighborhoods.  If you live in a planned community or townhome or condo project they may not allow it check your HOA documents.  Some of the newer ones are openly encouraging Airbnb rentals.  Some apartment complexes short term rentals violate and void a lease others allow it.  Would I rent a room in my own home Never.  But a standalone resort condo yes Airbnb allows me to reach a larger audience from all over the world. 

Costs have really risen especially at coastal areas due to doubling and tripling of insurance costs and just general inflation.  Sometimes I stay at hotels sometimes at Airbnbs.  In high cost areas like south Florida in the winter Airbnbs are much cheaper,  in Houston for example hotels usually are.  I run my Airbnb rental like a business and have people I trust to clean and maintain things when I am not there.  I check on it 12 times a year min.  My own personal experiences with Airbnbs in Puerto Rico, Nevada, Texas, Florida, and NC is about 70% very positive and 30% I would never return again to that unit.   In little Havana in Miami I had a retired Cuban cook me a full Cuban meal and that was not included she just did it.  Moved her own car so coconuts would not fall on mine.  So positives experiences are the majority of them and a couple of experiences were mainly due to locational issues and one was neglect by the owner.    Oh one more thing Hilton Head in the prime spring and summer is much cheaper in an Airbnb as the hotels on the island are all very expensive.  

I did know of one person in Franklin renting her home as a full house Airbnb rental she gave up and long term rented it as she found it too problematic. 

Edited June 30, 2023 by KJHburg

[Hey_Hey]

For those mentioning that AirBnB still seems to be growing, that could be the case and still have RevPAL drop. If available units free by 25% but demand only grew 10% the. RevPAL would drop.
 

This could also be a platform specific problem. We have converted back to hotels for most of our stays unless we’re going to the beach. What I’ve found is that it is much cheaper to find the property on Airbnb and then rent it on the management company website. They avoid AirBNB fees that way and pass that along. The fees getting tacked into AirBNB and VRBO are crazy. The cleaning fee is especially painful. 
 

my suspicion is that there’s a correction coming and those people who thought they would make a killing are going to be under water since they paid so much for the unit in the first place. 

[markhollin]

Nice cover story in this week's Nashville Ledger on Butch Spyridon's retirement from the Nashville Convention & Visitors Corporation:

http://tnledger.com/editorial/Article.aspx?id=166973

[KJHburg]

7 hours ago, Hey_Hey said:

For those mentioning that AirBnB still seems to be growing, that could be the case and still have RevPAL drop. If available units free by 25% but demand only grew 10% the. RevPAL would drop.
 

This could also be a platform specific problem. We have converted back to hotels for most of our stays unless we’re going to the beach. What I’ve found is that it is much cheaper to find the property on Airbnb and then rent it on the management company website. They avoid AirBNB fees that way and pass that along. The fees getting tacked into AirBNB and VRBO are crazy. The cleaning fee is especially painful. 
 

my suspicion is that there’s a correction coming and those people who thought they would make a killing are going to be under water since they paid so much for the unit in the first place. 

for short stays I agree with you hotels are usually cheaper except in high cost areas (like what I have found in south Florida in the winter) and direct bookings are growing.  These are people who may rent once through airbnb and get to the owner or manager and rent directly through them.  I have people who do that and others who would rather work through a platform like Airbnb. 

for vacation homes and rentals for short term this has always been true:  short term rentals may cash flow but it is unlikely they make money. If you buy a short term rental you better be prepared to pay the costs without any income.  If you can and many can then you are okay.   The costs of keeping them up is too high especially with a fully furnished place.  I know people in my resort who have sold after a year because they had grandiose ideas of making big money.  

But for places like Nashville it is just so much supply causing revenue to drop by rental but your hotel rates are fairly high much higher than Atlanta or Charlotte for example.   Just as there can be an oversupply of hotel rooms there can be too many short term rentals.    Looks like Nashville has 7000 or so permitted short term rentals.

https://wpln.org/post/episodes/checking-in-on-nashvilles-short-term-rental-industry-and-regulations/

[smeagolsfree]

I think Kevin hit on what I was saying and that is supply is outpacing demand in a lot of areas for the STR's. Too many people think they can just hop on the bandwagon and rent out their couch or whatever space they have. I did not think about the insurance rates going up in the coastal areas, but it makes since. I barely want to visit there now much less live there. I have been reading articles about the high cost of insurance and it is starting to cause folks a major problem from buying in states like Florida and coastal areas. I took my first and last trip to the Miami area and can say I personally do not like it, but I do see how others would. California is another state that is being hit hard by the insurance crisis because of the climate changes. I know that will get the far-right naysayers' panties in a wad that say there is no such thing, but the amount of forest fires there and in Canada not to mention the storms we are having say otherwise. I digress though. 

In this state, the state government has left little room for regulation of STR,s which is unfortunate. Again, it is a factor of State government interfering with local governments to self-govern. 

[chris holman]

https://www.wkrn.com/special-reports/nashville-forward/nashville-luxury-apartments-offering-free-rent-as-supply-exceeds-demand/

 

[MontanaGuy]

13 minutes ago, chris holman said:

https://www.wkrn.com/special-reports/nashville-forward/nashville-luxury-apartments-offering-free-rent-as-supply-exceeds-demand/

 

That sounds good for new renters but it doesn't sound so good for those of us who want to see more highrise apartments constructed!

[nashville born]

There is a new show on HGTV called, Making Modern with Brooke and Brice and it's set in Nashville.  They have a lot of shots/views of the skyline and area throughout the show.  And another of their home makeover show stars is expanding by starting her second show in Nashville as well.

[Bos2Nash]

11 minutes ago, nashville born said:

There is a new show on HGTV called, Making Modern with Brooke and Brice and it's set in Nashville.  They have a lot of shots/views of the skyline and area throughout the show.  And another of their home makeover show stars is expanding by starting her second show in Nashville as well.

[nashville born]

24 minutes ago, Bos2Nash said:

I know it isn't as newsworthy as we'd like.  Just sharing because some of us like to see updated views of the skyline and this show uses many of them.

[Bos2Nash]

13 minutes ago, nashville born said:

I know it isn't as newsworthy as we'd like.  Just sharing because some of us like to see updated views of the skyline and this show uses many of them.

Oh I know. It isn't the skyline views that I dislike, it's more the HGTV shows that I really don't like. The HGTV effect is very real and to me has caused alot of problems within the housing the market/residential professional services world.

[markhollin]

All eyes are on mounting debt in the commercial real estate world, which continues to struggle with higher interest rates, a more cautious lending environment and muted return-to-office and leasing activity in the wake of the Covid-19 pandemic.

Nearly $1.5 trillion in commercial real estate debt is maturing by the end of 2025, Morgan Stanley analysts found this spring.

Major gateway markets are carrying the most CMBS debt maturing within the next 18 months, with New York topping the list (at about $39.8 billion), followed by Los Angeles ($17.9 billion), Miami ($12.6 billion), San Francisco ($11.4 billion) and Las Vegas (nearly $10.6 billion).

Much more at NBJ here:

https://www.bizjournals.com/nashville/news/2023/07/05/markets-cmbs-debt-maturing-soon.html

Glad that Nashville is NOT on either of these lists (although I wouldn't be surprised if we are percolating just under  that Top 20):
 

[smeagolsfree]

The surprising news on these lists is that Charlotte is not on the largest CMBS Markets but are in the middle of the pack as far as distressed markets go. The same goes for Phily, Columbus, Portland, and no surprise Detroit with a few others thrown in there.

[KJHburg]

28 minutes ago, smeagolsfree said:

The surprising news on these lists is that Charlotte is not on the largest CMBS Markets but are in the middle of the pack as far as distressed markets go. The same goes for Phily, Columbus, Portland, and no surprise Detroit with a few others thrown in there.

We already had a 23 story 1990s office building uptown go into default.  Why?  the owners then Dillweg bought it at a good price then put even more debt on it and then walked away when one tenant left.  It is like over mortgaging your house then saying you can't make the payments.  They did this in suburban Raleigh office building too.  That tower uptown was about 70% full.  But of course there are some office buildings in worse shape and just depends on how they can refinance.  This is a nationwide problem with buildings selling at high values, cheap debt maturing and now higher interest rates.    This one line explains it from CLT Biz Journal:  "" Dilweg purchased the 23-story, 476,393-square-foot building in 2017 for $79 million, according to previous CBJ reporting. About $120 million is owed on the loan, Dilweg said.""   

[markhollin]

Even though the pace of new announcements has been slower than the norm over the previous 13 years, the first 6 months of 2023 in Nashville has been more active than some may recall:

3 & 4 story developments: 37
5-9 story projects: 22
10-19 story towers: 16
20-29 story towers: 4
30-39 story towers: 3
40-49 story towers: 1 

Add to that lots of percolation on Titans Stadium, Tishman Speyer site, Streelights site, Carter Guitars/Arnold's site, 1401 Church site,  14th & Hynes site, Station East site, East Bank planning, impending TPAC relocation, etc. and you have a pretty busy half-year so far. 
 

[Deepdish53]

20 hours ago, markhollin said:

Glad that Nashville is NOT on either of these lists (although I wouldn't be surprised if we are percolating just under  that Top 20):
 

 

For what it’s worth, I’ve heard anecdotally from a few folks that I know who work in downtown Nashville office buildings that they’re starting to see more folks in their buildings and more build-outs of office space seem to be happening in their buildings than in the last couple of years. I know that Peabody Plaza has the last couple floors currently being built out right now and will officially be fully leased by the end of the year (sans the one remaining retail space right at the corner of Hermitage and KVB).

Wouldn’t surprise me if we’re doing a little better than the national average on office occupancy with the number of people who have relocated here since the pandemic.

[smeagolsfree]

17 hours ago, KJHburg said:

We already had a 23 story 1990s office building uptown go into default.  Why?  the owners then Dillweg bought it at a good price then put even more debt on it and then walked away when one tenant left.  It is like over mortgaging your house then saying you can't make the payments.  They did this in suburban Raleigh office building too.  That tower uptown was about 70% full.  But of course there are some office buildings in worse shape and just depends on how they can refinance.  This is a nationwide problem with buildings selling at high values, cheap debt maturing and now higher interest rates.    This one line explains it from CLT Biz Journal:  "" Dilweg purchased the 23-story, 476,393-square-foot building in 2017 for $79 million, according to previous CBJ reporting. About $120 million is owed on the loan, Dilweg said.""   

I am so glad we did not start all of our office buildings here, otherwise we could have been in the same shape. Sorry for your troubles in Charlotte. I thought it was interesting thought the amount of distressed loans there. Mark and I were talking on the phone yesterday and surprised Las Vegas was not on the list.

[MLBrumby]

More of a "Tennessee Bits and Pieces" but Nashville has a huge part in this recognition. In case you haven't been to Knoxville lately, you'll be amazed how that city is booming. And our little city in the Tennessee Valley is really perking. I must say that beting between Atlanta and Nashville spins off so much growth to Chattanooga, and we're seeing that in all sectors of our county. 

Many on this forum aren't surprised by this, but this does give some hard numbers to what we've seen around us. Anyway, today Bloomberg noted that 6 states, Texas, Florida, Georgia, Carolinas and Tennessee contributed more to GDP growth than all other states combined. 

https://www.bloomberg.com/news/features/2023-06-29/millions-move-to-the-south-as-us-economy-favors-its-wealth-job-opportunities?sref=U3dOGIDF

Bloomberg gives a shout out to Fort Worth, which is significantly less obnoxious than Austin when it comes to bloviating about their city's growth...   Nashville, where the asset-management firm AllianceBernstein relocated a few years ago, has become the country’s top real estate "supernova" in surveys by PricewaterhouseCoopers and the Urban Land Institute. Houston, Atlanta and Charlotte, longtime home of Bank of America Corp., rank among theTop 10 Moving Destinations nationwide by Penske Truck Rental — all ahead of boomtown Austin.  And no one beats Fort Worth, Texas, near Dallas, the country’s fastest-growing big city in the latest US Census Bureau data.