It’s been almost six months since the city’s Local Law 18 went into effect.
The rule, part of New York City’s crackdown on short-term rentals, looks like it’s been a shot in the arm for the hospitality industry. But its purported goal of opening up the city’s rental market seems as far away as ever.
Proponents of the law portrayed it as a step towards alleviating the city’s housing crisis. By curbing the proliferation of listings on platforms like Airbnb and Vrbo, the law was intended to free up residential units and ease the strain on New York’s undersupplied housing market.
But the actual impact of the ban on housing availability remains, at best, uncertain. Before the ban, there were just over 10,000 short-term rentals in the city.
The city’s recent report on housing vacancy showed there were just 33,000 apartments available for rent in the first half of last year, a vacancy rate of 1.4 percent. Adding 10,000 units to that total would bump the vacancy rate up 1.8 percent — an improvement, but still far from a healthy rental market.
The problem for property owners is simple: the pivot from renting out units on the short term to becoming a full-blown landlord is daunting.
While the law may not solve the housing crisis, it may have been the boost that the city’s hospitality industry needed. Hotels saw a surge in demand and profitability to end the year, including a jump in average daily rates of 10 percent year over year, according to Costar. Nationwide, that metric jumped by around 3 percent in the same period.
Commercial sales in the city were down in 2023, but hotels emerged as a hot sector in the cold market, with $2 billion in sales last year, its highest dollar value since 2019.
Of course, the Airbnb ban shouldn’t get all of the credit. The city was set to add 10,000 new hotel units in the latter half of last year. That progress could hit a snag this year, thanks to a 2021 law passed by Bill de Blasio requiring developers to secure City Council approval regardless of zoning.
Those two factors, plus continuing growth in post-pandemic tourism, are likely to mean the arrow is pointing up for hotels.
In that regard, the Airbnb ban looks to be an early success. Just don’t wait for it to solve the city’s housing crisis.
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What we’re thinking about: Will the city’s former Airbnb landlords eventually pivot to more traditional renting? Send a note to david.westenhaver@therealdeal.com.
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Closing Time
Residential: The priciest residential closing Friday was $4.6 million for a co-op unit at 17 East 89th Street.
Commercial: The most expensive commercial closing of the day was $265 million for Carlyle Group’s purchase of 150 Amsterdam Avenue.
New to the Market
The priciest home to hit the market Friday was a Penthouse #2009 at 1 Central Park South on Billionaire’s Row asking $45 million. Nikki Field’s team at Sotheby’s International Realty has the listing.
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A thing we’ve learned: Inwood Hill Park, at Manhattan’s northern tip, is home to the last remaining natural forest on the island. A pity, given that the Lenape word Manhattan literally means “the place where we get bows,” or, more figuratively, the “place for gathering the (wood to make) bows.”
Elsewhere in New York
— Manhattan District Attorney Alvin Bragg announced a series of indictments Thursday tied to a Jan. 27 fight between NYPD officers and a group of migrants. Prosecutors released a video of the incident, which seemingly contradicts the NYPD’s report of the incident, The City reports. The melee became something of a political football for lawmakers, some of whom called for an end to New York’s sanctuary city laws.
— A historic bowling alley in Queens is nearing an end. The City Council announced plans to rezone Flushing’s Whitestone Lanes, clearing the way for a redevelopment that was proposed years ago, Gothamist reports. The project will replace the 60-year-old facility with 415 units of housing, with 30 percent affordable units.
— “Skyscraper Queen” Darcy Stacom announced earlier this week she was leaving CBRE to start her own brokerage. She sat down with Crain’s to talk about amicable departures, institutional investors and why she’s moving now.