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Corporate rentals are complicating Boston’s housing market

The Serenity complex on South Huntington Avenue has 24 units for short-term leases.
The Serenity complex on South Huntington Avenue has 24 units for short-term leases.Pat Greenhouse/Globe Staff

The 13-story tower in Jamaica Plain was pitched as one small part of the solution to Boston’s housing crunch, adding 195 apartments to a market that needs all the units it can get.

Yet with one signature last month, 24 of those apartments were taken off the table, snapped up by a corporate-housing giant that will install couches and beds, stock the cabinets with dishes, and rent the spaces — probably for $200 or more a night — to traveling business people and visiting doctors in town for a few weeks or months.

The deal between Churchill Corporate Services and Brookline-based Longwood Group is one of the biggest yet in Boston for a growing — and some say worrisome — niche in the city’s drum-tight rental market: corporate housing.

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For property owners, it can be a good deal, especially when they’re seeking to fill large new buildings, which can take a year or more. Third-party operators such as Churchill and the industry giant Oakwood Worldwide will pay full freight for apartments that might otherwise sit empty for months.

But some housing advocates worry that could crowd out everyday renters, sidelining much-needed apartments to serve short-timers who can afford far higher rents.

“This is scary,” said Rich Giordano, an organizer at Fenway Community Development Corporation. “These are all units that should be rental apartments, and they’re basically being used as hotels.”

Temporary furnished apartments have long been a piece of Boston’s housing market, catering to relocating executives, doctors, and academics and typically tucked into high-end apartment buildings. Now, amid the demand from growing companies such as General Electric and from international patients at Boston’s hospitals, the market is expanding.

There are no comprehensive data on the corporate-rental industry, and it’s not clear how many temporary units exist in Boston. The websites of several major players in the industry list units in new, high-end buildings in Downtown Crossing, the Fenway, Kendall Square, and the Seaport, as well as in suburban municipalities like Quincy and Waltham. But there’s no definitive database or registration requirement.

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Los Angeles-based Oakwood says it runs about 300 apartments in Boston, including an entire 94-unit building on India Street downtown. Northeast Suites, a local firm, has grown from about 25 apartments five years ago to 250 today, said chief executive Patrick Flynn, and it now has long-term contracts to manage short-term rentals in several large buildings in and around Boston.

Demand is strong, both from companies that are growing in Boston and people here for stints at hospitals and universities, Flynn said. His firm’s clients range from GE and Dell to those doing movie shoots and traveling shows like Cirque du Soleil. And they focus on booking rooms in full-service buildings with all the bells and whistles. Their average tenant, he said, stays 72 days.

“You’re giving people really high-end finishes, for lower costs than a hotel,” he said. “And they can cook at home.”

The industry is little-regulated, and, in most cases, no hotel taxes are collected. Corporate rental firms lease units for a year or more and then rent them to relocation firms or individuals — usually for at least one month at a time — at a significant premium. For example, a Kendall Square apartment that rents for $3,048 a month on the open market is listed at $219 a night by Oakwood. That’s $6,570 for 30 days.

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Now lawmakers in Boston are trying to figure out how to regulate the industry, as they work on new rules for more tourist-oriented short-term rentals such as the apartments found on Airbnb. Officials in Mayor Martin J. Walsh’s administration say they see the need for corporate housing, but the mayor has made adding housing a top priority. The city doesn’t want to lose long-term units to the more lucrative corporate market.

“On one hand, these apartments are being used and providing a place for people to stay. On the other, they could have been set aside for a long-term lease for someone,” said Chris English, a policy analyst for the city who’s working on the issue. “That’s the rub.”

Complicating matters, developers don’t typically share their corporate housing plans when they’re seeking city permits, which often happens two or more years before a building is ready for occupancy. That makes it difficult to know how much of the space will be used as temporary housing.

Giordano, of Fenway Community Development, said that he has tracked buildings in the Fenway neighborhood that were approved as regular apartments but that now dedicate a quarter or more of their space to short-term rentals, targeting visitors to Longwood Medical Area and the neighborhood’s many colleges.

But as with Airbnb, the listings come and go, and it’s tough to gauge the extent of temporary rentals, said Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, which is lobbying for clearer short-term rental rules.

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“You can’t ban this type of business, and no one’s saying you should,” he said. “But it should be transparent from the get-go. As it is, it’s really hard to pin down.”

That may be, at least in part, because the arrangements — like the apartments — are often temporary. Longwood Group’s just-signed deal with Churchill, for example, lasts one year, said Longwood principal Anthony Nader; it sets aside a full two floors of the Serenity complex on South Huntington Avenue. If the rest of the 195-unit building fills up quickly, Nader can take those 24 apartments back next year and put them on the market in time for the busy fall leasing season. If not, he can keep cashing checks from Churchill.

Either way, he said, it will help get Serenity off the ground.

“It’s a good deal for both sides,” Nader said. “And it’s a good way to fill a big empty building.”


Tim Logan can be reached at tim.logan@globe.com. Follow him on Twitter @bytimlogan.