When Jesse Stein became Airbnb’s global head of real estate in January 2020, the San Francisco-founded company had nearly 800,000 square feet of offices around Showplace Square. Two years into the pandemic, even as other tech firms began to roll back their work-from- home policies, the company that has become synonymous with short-term rentals declared that it would remain “remote first,” putting all but its headquarters at 888 Brannan on the sublease market.
But even as its office footprint shrinks, Stein said Airbnb can aid in the city’s recovery by getting “heads on beds” via its newly expanded Airbnb-Friendly Apartments program. Under the program, apartment dwellers can sublease their units for short-term rentals when they don’t need them, with revenue split among the tenant, landlord and Airbnb. It was one of Stein’s top priorities when he came over from KHP Capital Partners, where he was the hotel private equity firm’s investment principal.
Before he switched companies, he recalled flying around the country looking at hotel investments and seeing “cranes, cranes, cranes.” After doing some research, he found out it was all new apartment construction.
“I was thinking to myself, ‘Wow, if Airbnb could figure out a way to partner with these landlords it would provide a ton of flexibility and opportunity for renters to make some extra money,’” he said. “One of the reasons I joined Airbnb was that opportunity.”
In an interview with The Real Deal, Stein touched on other opportunities that Airbnb sees in the aftermath of the pandemic, why the company doesn’t want to become a landlord and how it could move into the co-working industry.
If a return to office gains momentum, how will that impact Airbnb?
How do you define return to work? Companies are asking employees to come back to the office more but flexible lifestyles are here to stay. Even if you have a return to work, I don’t see many companies requiring five days a week, especially in San Francisco.
So it provides the opportunity to continue to travel more than you did pre-COVID and consumers will be hosting more because they’re more flexible.
How do you see in-office policies impacting your real estate footprint?
Since the pandemic we have gone to a remote-first company. So we do have a huge office in San Francisco, 888 Brannon, and we have a number of years left on our lease. We are potentially exploring options, but we will always have a presence in the Bay Area to the best of my knowledge. Our employees are going to continue to come to the office, just not every day.
When you’re in San Francisco and you’re only allowing San Francisco employees, you might not get the best talent because people have families, people have lives, and it has been a huge tailwind for our human resources team to onboard talent from across the US, and honestly across the globe.
I definitely think it’s a competitive advantage on the recruiting side. No question. I have three little girls and I live in the East Bay, so commuting to the city every day for me is a challenge. Would I leave Airbnb if they required me to come back to the office five days a week? I don’t know. I’d have to think about it. Right now it really is a perk that I can take my daughters to cheerleading at 6 o’clock where, historically, I couldn’t.
With that being said, there needs to be a balance, and nothing replaces that in-person collaboration or that in-person meeting. It just doesn’t need to be five days a week anymore in our minds.
Would Airbnb be interested in renting more co-working spaces for when larger groups come together?
We will have a permanent office space in the Bay Area, first and foremost. When it comes to other areas, I’ll be honest, my team meets at Airbnbs sometimes. We just rented a large Airbnb and we all spent a day brainstorming and it was a great collaboration. So would I call that co-working, or would I call that an Airbnb? I don’t know. It’s all kind of starting to blur to a certain degree.
With the apartment market down, is there a chance Airbnb would buy some of these buildings and rent the units out directly?
We have taken the strategic position of being a partner to the landlords or the real estate owners versus a competitor. We’re a very large company, but even with the scale of our company we can only unlock the ability to host for tens of thousands of renters if we were to own it, and only do it in the buildings we’re in.
We philosophically believe every renter in the world should be able to do this. So we’ve made the decision to partner with the largest owners, and eventually the mom-and-pops, to unlock the ability for everyone to host part time. If you compete with them they’re not going to partner with you, so we don’t ever want to be viewed as a competitor to the real estate industry.
With climate change it’s not the best thing to say, but at the end of the day all ships rise with the tide. So we want to rise with the tide in conjunction with our partners.
What about homeowners? Since the sales market has slowed, have you seen more join Airbnb to rent their homes?
I don’t want to get into that granular detail. But we just released our quarterly earnings, and we’ve had the highest growth in supply that we have ever had in Q3. I think that kind of speaks for itself from a supply growth perspective that there is a tremendous amount of demand to be an Airbnb host today.
How about demand from guests?
We’re really focused on growing international destinations right now. From a demand-and-supply side, the awareness of Airbnb is very low internationally. So there’s a huge opportunity, internationally, to lean in to create awareness.
When it comes to domestic demand, during COVID there was this huge spike in drive-to leisure markets that is still above where it was historically. But also there is a return to work and we’re seeing a large growth in urban markets as well.
I would say there’s just more demand for travel than there ever has been historically. Where it goes, specifically, is up to the consumer, and that kind of varies.
But it’s above where it was in 2019, for the most part, across the board.
What do you see for San Francisco’s future?
We have such a love and respect for the city and its creativity. We started in an apartment in San Francisco and now we’re a noun and a verb. I think we are going to continue to embrace and hopefully help revitalize the city to be one of the greatest in the world again.
I don’t want to say we love one child over another, but there’s a special place in our hearts for San Francisco.
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