Guests from far and wide make Rochester an Airbnb hot spot

ROCHESTER – Homeowners and investors across this city are throwing open unused basements, spare rooms and second homes in growing numbers, creating a runaway Airbnb market with some 11,000 guests over the past 12 months.

The rush of properties advertising cozy living rooms, updated kitchens or simple amenities not usually found in a hotel — recliners are a hit, hosts say — saw Rochester outpace the Twin Cities for Airbnb growth this year, even though Minneapolis hosted a Super Bowl that drove scores of metro homeowners to join the website.

"Rochester is definitely a big market for us," said Ben Breit, an Airbnb spokesman. It's Minnesota's fourth-busiest market in terms of guests, behind Minneapolis, St. Paul and Duluth. And it's third in terms of revenue, with hosts making $1.6 million in 2017, he said.

And it's still growing.

The driver, of course, is the Mayo Clinic: Airbnb hosts say most of their guests are either patients at the world-renowned hospital or families of those patients. Mayo's $5.6 billion, 20-year expansion promises to bring thousands of new employees while expanding the city in all directions. And all those people will need a place to stay.

The action is even drawing far-off and deep-pocketed investors like Airbnb Superhost Viki, who describes herself on the firm's website as a Hong Kong resident who loves traveling and learning about other cultures. She joined Airbnb in the summer of 2017 and now lists 14 apartments in Rochester. The units are heavily rented, and appear to be in a newer apartment complex with a pool and gym facilities.

Anecdotes like that have drawn concern from affordable-housing advocates, who argue that the rental rush is worsening an already tough housing market. Others say it's too soon to tell. And Airbnb hosts like Rachel Nagel say that Airbnb rentals can offer a homey, human touch in a city that hosts thousands of people every year who desperately need help.

Nagel has had guests facing terminal illnesses, and recently hosted a mother from the United Kingdom who was seeking answers to medical mysteries that threaten her child. One guest was struggling with the property's door code; Nagel said she and her husband figured out that the woman was also dealing with her husband's illness, so they sprang into action to give her extra attention.

"It really is a great service to Rochester because these people need a lot of extra TLC," she said.

So far, the city has largely taken a hands-off approach to the short-term vacation rental businesses, but that could change soon. After months of raising concerns, the City Council has asked the planning department to draw up a list of recommendations for licensing, inspections, density restrictions, code enforcement and other matters.

The city has struggled with a shortage of affordable housing for years, even before the Mayo expansion started. Rochester was the nation's third-worst market for affordability out of 400 urban areas analyzed in a recent a survey by Nationwide, the insurance company.

But it's unclear if Airbnb and other short-term rental businesses present a threat to affordable housing, said Paul Williams, the president and CEO of Project for Pride in Living and a board member of the Destination Medical Center Corporation.

"I just think it's still uncharted territory. It's clearly serving a market and a need," he said.

On a recent visit to Nashville, Williams learned that short-term rentals are upending other cities too, but he said many of the units that end up on Airbnb are not affordable housing in the first place.

At least one new development in Rochester plans to block investors from buying units for Airbnb rentals. The luxury apartment building Riverwalk Rochester should see its first residents move in to some of the building's 152 units on Feb. 1, said Mike Zirbes, a developer for the project. Sitting near the banks of the South Fork Zumbro River, the building has views of downtown and is just blocks from the Mayo Clinic. Investors seeking to buy units for short-term rentals have already come calling, but the company turned them away, said Zirbes.

"We would fear that that would risk the happiness of our long-term residents," he said.

For some Airbnb hosts, the market has already grown too big, too fast. Mark Schroeder said he enjoyed using Airbnb to rent out a duplex his family owns six block from the Mayo Clinic when he first joined the site four years ago. His big selling point was a leather recliner. A renter who had just spent hours undergoing tests at Mayo loved being able to kick back and relax in the chair, he said.

Over time, however, Airbnb grew less appealing, he said. His family moved farther away from the rental property, making the cleaning and maintenance more time-consuming. He also felt he couldn't be away from Rochester for too long while renting to short-term visitors.

The end came this summer, when Schroeder saw dozens of new Rochester Airbnb listings show up online. "The market just got saturated," he said.

He left the website in June.

For others, hosting on Airbnb has been life-changing. It's far more than a side hustle for people like JoLynn Skogen, a retired Rochester resident who said she prides herself on her Airbnb hosting. She learned about the website two years ago from a nephew in St. Paul.

"I love it; I just love it!" said Skogen, who's earned a five-star "Superhost" rating. She's had guests from countries near and far, many to receive treatment at the Mayo Clinic or even work there for short stints.

It's the patients who often need extra support, and Skogen said she goes out of her way to be useful. She drives to the Rochester airport to pick up or drop off guests, stocks her rental apartment with flowers, and religiously cleans the unit between guests, keeping in mind that some of them are in fragile health.

"If I've known someone's had a long flight, I've gone so far as to put a roast in a hot pot for them," she said.

Some of the guests become friends after they're invited down to her family's house for dinner; others need their privacy. Skogen said she's become good at reading her guests. They've rewarded her diligence with high ratings and good reviews, driving more business her way.

"I can't tell you how many people have said 'I'm so grateful to have a place like this to come home to,' " she said.

She's not worried about growth in the local Airbnb market — her guests want a place that feels more like a home.

"It will be some time before it taps out," she said. "I think this is just really the beginning."

Matt McKinney • 612-673-7329