The Wall Street Journal
(Copyright (c) 1996, Dow Jones & Company, Inc.)
On the eve of the Summer Olympics, Atlanta homeowners and real-estate agents are learning a lesson about supply and demand -- the hard way.
Despite early promises of riches to be made from Olympic leasing, tens of thousands of residents throughout the metropolitan area haven't been able to rent their homes to out-of-towners for the 17-day Games, which open next Friday. In fact, the demand for private housing for the event is so low that most leasing companies have stopped accepting any new listings and expect ultimately to rent only a small fraction of the homes in their databases.
"A lot of people thought they'd pay off their mortgage and get rich in the process," says Dusty Rhoades, executive vice president of Private Housing 1996 Inc., which is officially sanctioned by the Atlanta Committee for the Olympic Games and which has about 30,000 local homeowners registered in its database. Yet by the time the opening ceremonies begin, Mr. Rhoades expects to have rented only about 1,000 private homes and between 1,500 and 1,700 apartments.
"It's been unbelievable," laments Lewis Friedlander, a plastic surgeon who has been trying unsuccessfully for months to rent his home in Atlanta's affluent Buckhead neighborhood. The house has elaborate Japanese gardens, waterfalls and Oriental decor, and Dr. Friedlander was told earlier in the year that it could command at least $1,000 per night. But "at this point," he says, "I'd be willing to go down to $500."
Frank Hsiao is dropping the rental price on his self-described "luxury" town house located near Buckhead's popular entertainment district. He says he would be happy to receive between $5,000 and $10,000 for the duration of the Games for his five-bedroom dwelling. "A few thousand is better than nothing," he says.
Why did early predictions of big money from Olympic leasing fizzle out? Earlier this year, Private Housing made 40,000 calls to Olympic ticket holders, reaching about 10,000 people, according to Mr. Rhoades, and nearly three-quarters of the ticket holders said they already had accommodations. He surmises that most will stay with family or friends. (According to the Atlanta Olympic committee, 40% of ticket holders are from Georgia.)
At the same time that expected demand wasn't materializing, "supply literally came out of the woodwork,"says Jerry Attkisson, president of FJB Corp. Mr. Attkisson, whose company has executed about $15 million of summer leases, says demand for private homes has consistently run "a very low third" behind requests for hotel rooms and clusters of condominiums. Besides the deterrent of generally steeper prices, "people feel a little hesitant about staying in someone's home," he says.
Yet, for several years, it appeared that private homes would be the only alternative for many Olympic visitors. Once Atlanta won the 1996 Summer Olympics in 1990, the media began warning of a dearth of hotel rooms. To help fill the projected need for housing, aggressive real-estate agents blanketed Atlanta neighborhoods, telling homeowners that Olympic visitors would likely pay top dollar to stay in nice private homes.
Mark and Anne Kaiser heard they could probably net $90,000 by renting out their stately five-bedroom home in Buckhead for the duration of the Games. But before they got around to filling out the leasing application, they observed that "no one who had listed had any nibbles for that kind of money," Mr. Kaiser says. They decided not to apply.
Timothy Sutherland took the plunge and for weeks has been using newspaper ads and a half-dozen real-estate agents in an attempt to rent his spacious in-town home to Summer Olympics visitors. The house has eight bedrooms, which are rentable for $350 each, and three kitchens and is within walking distance to Olympic Stadium. Yet, Mr. Sutherland says, he has had only three phone calls from prospective renters, none of whom has yet signed up.
With so many homes available, few corporate renters -- the primary customer base -- have shown interest in leasing typical suburban homes with their varying bedroom sizes and furnishings. "Corporate clients need comparable accommodations," says Mr. Attkisson, who adds that he couldn't put the president of one corporate division in a master bedroom with a Jacuzzi and another division president in a 14-year-old boy's room with Pearl Jam posters on the wall.
Furthermore, "there are not that many corporations in the world coming to the Games that don't have relationships with hotels," says Eric Ryan, vice president of Leasing '96 at Atlanta's Harry Norman Realtors. Harry Norman has leased fewer than 10% of the 1,500 private homes and town homes in its inventory, Mr. Ryan says.
Private Homes' Mr. Rhoades observes that many executives without hotel reservations were offered rooms in the homes of Atlanta-based executives of their own companies. "Name me a company that doesn't have a regional sales office here," he says.
Still, some owners and real-estate agents remain optimistic, noting that tickets for desirable Olympic events remain plentiful. Creative Travel Services Inc. is meeting planes landing in Atlanta and offering to take visitors to its 200,000square-foot facility near the airport to show them an array of rental properties. Even though it currently has rented only about 20% of the 150,000 privately owned bedrooms in its database, it expects that figure to climb to 60% by next Friday.
Calls also are picking up at Harry Norman. "We're seeing more business now than we have during the whole time," Mr. Ryan says.
But when all is said and done, FJB Corp.'s Mr. Attkisson believes, many thousands of homeowners will be left with unsigned leases and the echo of unfulfilled promises.