Julie Earle-Levine on short-term luxury in the Hamptons
FT, Jun 18, 2004
New Yorkers may tolerate narrow buildings and cramped apartments for nine months of the year. But during the summer, they head to more spacious quarters in the beach communities of the Hamptons. Some negotiate alternate weekend summer shares with friends and colleagues or pay outrageous amounts for a full season in a smallish houses.
But there is another option: a short-term stay in an actual mansion.
Most Hamptons houses rent at premium prices, with a summer costing $100,000, (£60,000) on average. One property worth $20m rented at $125,000 for just one a week last year. But more reasonably priced short-term rentals can be found.
Hamptons Retreats now manages 25 vacation residences on behalf of their owners. The properties, which are valued at $1m to $25m and range from a cottage on the beach to a 14-acre estate with a stable of horses, are available for $6,000 per week and up. "That way people who don't want to commit to the whole season can come for a week, or even a weekend, then go to Europe," says Brad Zackson, the company's chief executive officer.
He is targetting guests from Europe and other US cities, as well as New York, and expects their incomes to range from $100,000 to $500,000.
The arrangement benefits property owners too, enabling them to got more money out of their homes, especially as the Hamptons becomes a year-round destination. Hamptons Retreats continues to manage the home through the off-season, making small repairs and opening up houses that usually sit vacant for 38 weeks of the year.
"A $1m house would probably rent for $50,000 for the entire season," Zackson says. We think the return to the same homeowner working with us, might be $130,000 to $140,000 annually."
Michael Jaufman, co-manager and co-owner of Accommodation Plus, an agency that owns the homes it rents, says Hamptons renters are much better off than buyers in today's market.
The average cost of a home is $5m, and a property that would have been relatively inexpensive at $200,000 10 years ago is now worth $600,000 to $800,000, he says. "Rentals have not reached that quadrupling."
People who bought homes at "huge prices" in recent years and expected them to rent for large amounts have been disappointed. "They are finding out they can't do the old rule of thumb that the rental would be 10 per cent of the sales price," says Jaufman.
But, even as rentals for the season, which lasts from from Memorial Day in late May to Labor Day in early September, continue to slow, short-term rentals are picking up. "We have excellent clientele, including getting calls from the travel desk at the White House," Jaufman says. Guests have proven they are more than willing to spend $2,000 a week in the early season - April or May - and $10,000 to $11,000 for a week in the high season for a fabulous property, he adds.
Both Hamptons Retreats and Accommodations Plus benefit from an obvious shortage of luxury hotels in the area. They woo guests by offering full-service treatment, including a concierge to organise yachts, invitations to private parties, dinner reservations at the hottest restaurants and spa services at the home.
Hamptons Retreats also offers daily maid service, a yogi and a private chef on call, as well as kids' programmes such as "Princess for a Day", which lets little girls get made up and host tea parties.
Homeowners have access to all these amenities when they're in town, but they do pay Hamptons Retreats about 30 to 40 per cent of their rental income for its property management services. Zackson expects to have more than 40 homes for summer 2005, and to expand the concept to other luxury vacation areas in the US and abroad. He won't say where, but they will be "very exclusive spots with a high real estate equity rate".
Accommodations Plus has ten houses and plans to buy more. "In the early years we were still getting calls from people who wanted us to rent their homes for them, but we are not realtors and don't want to be," Jaufman says. "Our homes are never owner occupied so when you come as a guest there is nothing personal for you to move."
Both men think that more Hamptons visitors will realise the benefits of a short-term mansion rentals."We are talking super luxury," says Zachman, but "in small doses."
DETAILSInfo: Hampton Retreats, 425 County Rd 39A, Suite 202, Southampton, NY 11968, USA. Tel: + 1 631-259 8000; www.hamptonretreats.comAccommodations Plus, 172 Newtown Lane, East Hampton, NY 11937, USA.Tel: + 1 631-324 1858; www.hamptonsvacations.com
Copyright © Financial Times group