Ever since the pandemic changed the nature of work, people are blurring the line between home, hotel and vacation. A large swath of the American workforce can— and plans to continue to — work from anywhere.
This trends, however, relies on flexible real estate that accommodates the diverse needs of visitors and residents alike. This is where short-term rentals (STR) can play a big part in Nashville.
Recent data from AirDNA confirms that there are 6,123 active STR listings in Nashville compared to the 19,557 rental apartment units. This statistic doesn’t include homes —which make up much more than 75% of the Airbnb pool.
The financial gains stemming from STRs are also significant. According to data from AirDNA, Nashville leads the country in revenue potential from short term rentals with $126,331 and the closest being in Key West, Florida at $104,939.
Our City is ready to capture this hot market— especially given the massive growth we are experiencing.
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A decade of transformational growth for the music city
Nashville has seen an influx of new residents and high-paying jobs in the last decade, making the city one of the country’s hottest real estate markets.
An Aug. 12, 2021, tweet from Mayor John Cooper highlights this perfectly: “Our community is larger and even more diverse than we were a decade ago. We’ve grown 14.2%— nearly twice as much as the national average.”
Recent Census data has shown that 36 people are moving to the region every day from big coastal cities such as New York, San Francisco and Los Angeles. Even amidst pandemic concerns that affected travel to Nashville, state tourism officials are confident that 2022 will see a return to the impressive figures the city saw in 2019—which hovered around 16 million visitors.
It's no surprise that Nashville has a track-record of being a destination with the highest demands for hotel rooms in the U.S., which helps contextualize the recent boom in purchasing and construction of hotels.
At the close of 2021, Blackstone —the investment group — purchased the 192-room Courtyard by Marriott in a $99.6 million sale; and Dreamscape Cos. partnered with San Francisco equity firm Meritage Group to buy the 230-room Holiday Inn & Suites in downtown Nashville for $74.7 million.
These acquisitions demonstrate the need for additional space,like STRs, to satisfy the growing number of tourists flocking to Nashville.
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Short term rentals will be a good investment for Nashville
A piece of legislation could have helped Nashville meet the demand for STRs. HB 645/SB 871, was before the Tennessee General Assembly in 2022, and sought to change permitting codes to allow Nashvillians to host short-term rental (STR) guests in their primary residence.
This bill, which did not pass this time, would have allowed homeowners to rent out their primary residences — as opposed to rental propertie s— for short bursts on Airbnb or other similar platforms. This permitting distinction is critical: residents must own and consider their homes or apartments to be their primary residence for them to be eligible for STR status.
We need to update our permits and laws to reflect the realities of the new hybrid working, living, and traveling environment — which will helps Nashville remain a competitive, top destination for those looking to live, work and play in the Music City.
We have already done the unbelievably hard work of attracting growth and tourism. Now we need to supply the short-term rental condos that our city so desperately lacks.
Meg Epstein is the CEO and Founder of CA South, a real estate development and investment management firm based in Nashville, TN.
This article originally appeared on Nashville Tennessean: Short-term rentals reflect the new realities of Nashville