Cruel Summer for Florida Airbnb Owners

It’s the last unofficial week of summer. So let’s break free from the steady drumbeat of out-of-office auto replies with some news about vacation rental homes:  

It’s not that good, if you’re an Airbnb owner. Less so, if you’re one in Florida.

Daily rates for vacation rentals saw big declines this summer in nearly every major destination in the state. And they were some of the biggest drops in the U.S.

• Average daily rates for vacation rentals in Orlando fell 6.9% in July from the same month last year, according to data from analytics firm AirDNA.

• Fort Lauderdale owners saw rates decline 5.5% to an average of $289 per night.

• Miami, however, was little changed. Owners pulled an average of $283.80 per night in July, compared with $284.11 last year.

• “Florida Fatigue” has lowered domestic tourism numbers overall, the Miami Herald reported this week. Visitors to Miami from other US states fell 6% in the first half of this year to 6.6 million. But tourism overall was up 1%.

• The dream of becoming an Airbnb host seemed a reasonable one a few years ago, when interest rates were below 3%, Americans were working remotely and traveling locally. Now, everyone’s a vacation landlord—and the country is awash in short-term rentals. Last month, there were 1.51 million vacation listings in the U.S, or 12% more than there were in July 2022, according to AirDNA.
  

Average Daily Rates for Florida Vacation Rentals, July ‘22 v July ‘23:

To Airbnb— or Not to Airbnb? I’ll See You in Court

Tampa-based real estate lawyer Stephen Hachey is seeing a new type of client these days:

Quarreling heirs to Airbnb beach houses.

It’s not that their rental business is faltering. But some see more value in cashing out, and can’t get their co-owners to agree to a sale. So they’re filing “partition lawsuits” to get a court to force the matter.

“It boils down to: somebody wants the money, and somebody wants to continue with the Airbnb,” Hachey said of the Airbnb partition cases he’s representing in coastal towns like Clearwater, St. Pete Beach and Anna Maria Island.

“People who bought thirty, forty, fifty years ago – they’re gorgeous properties smack dab on the beach,” Hachey said. “They’re family-owned properties purchased when it was kind of a ghost town, and all of a sudden, it’s five million dollars.”

If You Build it, They Will…Rent?

Miami’s ARK Homes for Rent will partner with a publicly-traded homebuilder to construct a 300-home community for lease in Fort Myers, Florida.

The venture — with the homebuilder yet to be announced — will break ground within 90 days.

The project is the first deal in ARK’s plan to invest $2 billion in single-family home rental communities in Sunbelt states.

The plan includes buying clusters of existing single-family homes and leasing them out. But the lion’s share of activity — about 65% — would be to construct entire communities of houses and townhomes dedicated for rent, Jordan Kavana, ARK’s chief executive officer, said in an interview.

“It’s the ideal model for the Sunbelt because you still have relative affordability, and the ability to build and rent at prices that are attainable,” Kavana said.

The sweet spot for ARK’s planned communities are homes of about 1,800 square feet at monthly rents below $3,000, Kavana said. That takes pricey Southeast Florida off the table— but offers plenty of opportunities elsewhere in the state.

ARK’s home rental communities will include a health and wellness center, walking trails, and gardens for communal fruit and vegetable growing, Kavana said.

Have you heard? Links and news from the week:

• A new home for Messi? Inter Miami announced this week that it began construction on a new $350 million soccer stadium at Miami Freedom Park. The 25,000-seat stadium will be complete sometime in 2025 — the same year that superstar Lionel Messi’s $150 million contract with the team is up. (Sun-Sentinel)

• Preliminary estimates of insured losses from Hurricane Idalia have begun, with about $9 billion in losses predicted for Florida alone. The estimate is lower than some had feared and well below the $60 billion in losses from Hurricane Ian, which followed a similar path last year but targeted more heavily populated areas on Florida’s southwest coast. (Insurance Journal)

• Three new property insurers have been approved to enter the Florida market this month. The news comes after several national insurers, including Farmers Insurance, have stopped writing policies in the state.

• A $302.5 million loan for a delayed Mandarin Oriental hotel and condo project in downtown Boca Raton. (Palm Beach Post) 

• A $51 million loan for a new Blackstone warehouse in Miami-Dade. (Commercial Observer)
  

  
  

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Have a wonderful weekend — see you next week!