During my 30+ years in the corporate housing sector, I’ve seen a number of trends come and go, but never as quickly as it is happening today. Much of the change, as you’d expect, has been the result of the COVID-19 pandemic, but not all of it. As the pandemic restrictions wane and companies bring employees back to the office, supply chain issues, the need to entice talent in tight job markets and, finally, concerns over safety and quality of life in major metro areas are playing a bigger role in reshaping corporate housing policies and practices.
Pre-COVID, most corporate mobility clients had what I like to think of as a “just-in-time” approach to corporate housing. They wanted to be inventory light: deliver units on the day of their executive’s arrival and end the lease within minutes of their departure. In many cases, they wanted as small a unit—often a studio or one bedroom—as possible. They usually wanted these units to be as close to the office as possible, so most were in downtown or mid-town areas.
But this just-in-time thinking is increasingly giving way to a just-in-case approach. And this is playing out in a number of different ways.
Take location, for example. Increasingly clients in major cities like New York, Los Angeles and San Francisco are asking us to find apartments in the near suburbs. For example, instead of Manhattan, maybe Stamford, or Santa Clara instead of San Francisco.
This trend started during the lockdowns when many downtown areas became ghost towns as restaurants, theaters, coffee shops, gyms and fitness centers closed. It was an attempt by clients to give their employees and relocating families more space, since they would be spending more time together in these units. But it is continuing post-COVID in part because of continuing concern over urban crime and safety.
It is also influencing where clients are moving their execs within cities. One large financial institution used to allow relocating executives to decide where in NYC and London they wanted to be. Now they are requiring most of their people to stay within walking distance of headquarters to avoid the subway in New York and the Underground in London.
Unit size is also increasing. As noted, this began during COVID when couples working from home needed extra room to juggle competing Zoom calls. But we are continuing to see a significant increase in requests for two and three-bedroom units.
Longer stays are now the norm. Our typical stay used to be between 30 and 86 days, but now it is more like 90 to 180 days. Corporate apartments that we used to turn over 10 times a year are now turning over twice.
We are also seeing clients using corporate housing as a perk to recruit talent, particularly talent that may have moved to exurbia or farther away to take advantage of WFH. One way to entice that key individual to join your company, or perhaps come into the office two days a week or maybe one week every month, is to sweeten the package with a nice corporate apartment.
Will these trends continue when the issues that prompted them are resolved? My guess is some will, some won’t. But for now—and for the foreseeable future—we are very much in a just-in-case world.
By Kenneth Flornes, Chief Development Officer
