FAYETTEVILLE -- Most of the city's short-term rentals are downtown, where vacant units are few and rent is generally higher.
The city's geographic information system employees are working on an online map showing the type and location of business licenses registered in the city, including those for short-term rentals. The map shows 289 short-term rentals registered so far. Of those, about 60% lie within 2 miles of Dickson Street and West Avenue in the city's entertainment district.
Owners of short-term rentals, such as those listed online on Airbnb and Vrbo, must get a business license and building inspection to operate legally in the city. The deadline to apply is Saturday.
The city's regulations classify short-term rentals as Type I or Type II. Type I rentals are homes that have full-time occupants with a room made available for nightly stays, or the whole home is made available for guests when its occupants are out of town. Type II rentals are residential units that accommodate guests year-round.
Most of the short-term rentals shown on the map are Type II -- 241 of the 289. About 140 of the Type II rentals are within 2 miles of Dickson Street and West Avenue.
The downtown housing market is tight. The Center for Business and Economic Research at the University of Arkansas counted 339 multifamily housing units for lease downtown, excluding student housing complexes, in the second half of 2021. Of those, seven were vacant -- about 2%. The boundary generally was Maple Street to the north, College Avenue to the east, Martin Luther King Jr. Boulevard to the south and University Avenue to the west.
Rent also is generally higher downtown than in other parts of town. The average one-bedroom unit, excluding student housing, was $761 per month, compared with $683 for the rest of the city. The average two-bedroom unit cost $970, compared with $793 citywide. Three-bedroom units on average cost $1,403 downtown, compared with $1,015 in the rest of the city.
Although the center hasn't tracked the effect of short-term rentals on the downtown housing market specifically, the basic tenet of supply and demand surely applies, said Jeff Cooperstein, senior research assistant at the Walton College of Business.
"People doing these short-term rentals definitely are making it harder for people who are actually trying to live there, not just vacation there," he said. "I don't think there's any doubt about that."
Ben Manatt said he lived at an apartment complex near Meadow Street and Church Avenue for nearly 15 years before getting a notice last year to move out because of renovations. He said he scrambled and was able to find another apartment near downtown, but the rent was significantly higher. Rent at his previous place was $600 per month, and at the new place rent was $1,200 monthly, he said.
Manatt moved back into the Meadow Street apartments a few weeks ago, after the renovations were finished. Rent is now $1,000. He said some of the other units are now short-term rentals.
"With all these operating -- those were households, those people had to go somewhere," Manatt said. "I know we want to build growth and bring tourism, and all that's great. That's Fayetteville and Northwest Arkansas. But at the same time, the Fayetteville vibe can't really survive being displaced."
Other cities have contended with housing issues in neighborhoods stemming from short-term rentals. A proposed law making its way through the Arizona Legislature would repeal a 2016 ban on local governments' ability to regulate the rentals. Lawmakers say the 2016 law had unintended consequences, according to a January article from tucson.com.
In some areas, investors bought whole blocks and converted the housing units into short-term rentals. As much as 40% of residential properties in tourist destinations such as Sedona are short-term rentals, the article says. Repeal of the 2016 law would revert control to local municipalities.
Short-term rentals have driven up rental rates, contributed to skyrocketing property prices and served as a driving force of gentrification in historically Black neighborhoods in New Orleans, according to an April editorial on nola.com.
New Orleans largely hasn't enforced its own rules on the rentals, the editorial says, and many operate illegally. Rules include where the rentals are allowed, limits on what kind of properties can be leased short term and occupancy limits. The city administration recently announced short-term rentals would be considered the same as any other commercial use in a residential zone, requiring a permit and building inspection.
CHANGING MARKET
Fayetteville has updated information on short-term applications and approvals, which differs slightly from what's available on the online map. As of Thursday, the city had received 503 applications for both types of short-term rentals, with 293 having been approved.
That leaves 210 still in review or awaiting more information. Short-term rental owners have had about a year to apply. The City Council adopted regulations for short-term rentals in April 2021 and extended the application period multiple times thereafter.
The regulations primarily deal with safety measures and getting a business license to operate. No more than 2% of all the city's housing units can be short-term rentals, and no more than one unit or 10% of all units in a multifamily building can be a short-term rental.
However, the city's code doesn't address concentration of short-term rental units in a particular area. The council floated a proposal that would have limited the number of units on a block, but it never made it to the final draft of the ordinance.
The data the city collects from the registry could help staffers better understand the dynamics of the short-term rentals' effects on neighborhoods, and the City Council could potentially make policy decisions based on the information, said Jonathan Curth, development services director.
"The ordinance has been amended three times since it was adopted," he said. "I wouldn't be shocked if it was amended once or twice more."
After the Saturday deadline, owners of Type II short-term rentals will have to get a permit from the Planning Commission to operate legally.
Charlotte Maggard with Bodkin Properties said she has managed four homes near downtown that once were long-term rentals and later renovated for short-term rental use. Different companies started managing them after they became short-term rentals.
For example, a two-bedroom, one-bathroom house on Mitchell Street, west of campus, most recently rented for $750 per month, Maggard said. The property owner renovated the home, and it now accommodates guests year-round. The home is booked for the week for graduation at the University of Arkansas, she said.
"I would assume that you'd make that much money within four days," Maggard said.
The city's regulation limiting short-term rentals to 2% of all residential units is helping create a mixed bag of tourism accommodations and housing for residents, said Logan Humphrey, owner of Cohobnb, a local company managing several short-term rentals in the region.
"That 2% cap should be looked at as 98% instead," he said. "Ninety-eight out of 100 doors you knock on are going to be residents of Fayetteville."
It's the nature of the short-term rental business to be concentrated around a city's attractions, Humphrey said. Being centrally located helps draw tourism dollars to the city. Otherwise, tourists may opt to stay in other Northwest Arkansas cities, such as Bentonville, he said.
Tourism and the residents who live in a community go hand-in-hand, Humphrey said. Tourism helps make a downtown great, and the residents who live there contribute to a culture that draws tourists, he said.
"There's always going to be some give and take there," Humphrey said. "I don't really have an answer as to what should or shouldn't be done based on proximity and location. But I know that's where our tourists want to stay."