Pacific City, Oregon

Pacific City, Oregon, a coastal township located in Tillamook County, represents an intriguing destination for short-term rental investors. With its scenic vistas, access to the Pacific Ocean, and a relatively tranquil atmosphere compared to nearby tourist-heavy locales, the market here offers unique opportunities. Though smaller in comparison to larger urban markets, Pacific City attracts visitors drawn to its natural beauty, outdoor activities, and proximity to notable attractions such as Cape Kiwanda State Natural Area and Nestucca Bay.

The COVID-19 pandemic reshaped travel preferences, giving rise to a demand for more isolated and expansive accommodations, which works in favor of Pacific City. As travelers seek out spaces that offer both recreation and relaxation, short-term rentals have surged in popularity. With the current Average Daily Rate (ADR) pegged at $348.3, Pacific City has carved a niche in the market that offers profitable prospects for short-term rental investors.

To effectively evaluate the short-term rental market in Pacific City, several Key Performance Indicators (KPIs) are considered:

• Average Daily Rate (ADR): Currently at $348.3. This figure suggests a premium market, likely due to the area's natural attractions and quality of accommodations.
• Occupancy Rate: Nationally, short-term rental occupancy rates hover around 60-70%. Pacific City may experience comparable or higher rates during the peak season, dependent on specific locations and market demand.
• Revenue Per Available Room (RevPAR): This figure provides insight into a rental's revenue generation capacity. Given the ADR, one can project RevPAR during high seasons could exceed $200.
• Market Supply: The number of active listings in Pacific City is relatively limited compared to larger cities. This constraint can lead to higher demand and rental costs, especially during peak seasons.

Monitoring these KPIs will provide investors with data-driven insights into their potential performance in the Pacific City rental market.

Pacific City's short-term rental market shows a noteworthy upward trend over the past decade, characterized by:

• Increased Tourist Arrivals: Visitor numbers have steadily risen as the area has gained recognition for its natural beauty and recreational opportunities. This trend is supported by data from the Oregon Tourism Commission.
• Development of Facilities: The local infrastructure has seen improvements, enhancing its appeal with new eateries, shops, and recreational offerings that cater to tourists.
• Property Investments: There has been a noticeable influx of investment in vacation rentals, which has resulted in a wider array of property options for potential renters, indirectly boosting the overall rental market.

This growth can be attributed to various factors such as shifting consumer preferences towards rural and coastal destinations, the rise of outdoor activities, and a desire for leisure distancing. As a result, potential investors in Pacific City can expect ongoing growth supported by changing tourism dynamics.

Investing in short-term rentals in Pacific City presents a sound opportunity for several reasons:

1. High ADRs and Increased Demand: An ADR of $348.3 indicates that properties can command a higher rental price, resulting in potentially substantial returns.
2. Reduced Competition: With a more modest number of active listings, investors may face less competitive pressure than in larger urban areas.
3. Tourism Growth Indicators: The region's growth trajectory, supported by tourism statistics, hints at strong demand for short-term rental accommodations.

While potential ROI calculations should consider operational costs, maintenance, property management fees, and periodic vacancies, the strong ADR combined with consistent demand offers favorable conditions for positive cash flow.

However, investors should also take into account the cyclical nature of tourism and be prepared for variations in income throughout the year.

Pacific City's tourism patterns reflect seasonal fluctuations common in coastal destinations.

• Peak Season (June – August): This period typically sees the highest occupancy rates, with families vacationing and groups seeking summer retreats. Properties can experience near-full bookings, elevating income potential.

• Shoulder Season (April – May, September – October): While occupancies may drop considerably compared to peak season, these months still attract visitors, especially those seeking to avoid crowds. Hosting events, such as the Pacific City Dory Days in July, can bolster rental activity.

• Off-Peak Season (November – March): Comparatively lower demand during the winter months often results in reduced occupancy rates; however, many properties positioned for winter activities can experience increased interest from travelers engaging in coastal winter sports or holiday getaways.

Investors should adjust their pricing strategies and marketing efforts accordingly, capitalizing on peak and shoulder seasons while preparing for the winter downturn.

The short-term rental landscape in Pacific City is diverse, with different property types offering varying performance metrics:

• Single-Family Homes: These properties tend to attract families and larger groups, resulting in higher occupancy rates during peak seasons. The communal space and kitchen amenities are appealing to guests seeking home-like experiences.

• Condos and Townhomes: Typically easier to manage due to lower maintenance needs, these properties also cater to couples and small groups. They can do well in terms of occupancy, particularly during off-peak months, where travelers may seek economical options.

• Unique Accommodations: Properties like tiny homes, cabins, and beachfront rentals might command a premium due to their novelty and location. These can achieve higher ADRs during the peak season, although they might not sustain performance during off-peak months.

Each property type carries its investment dynamics, and prospective investors need to align their choices with prevailing market demands and guest preferences.

Understanding guest preferences is crucial to maximizing the potential of short-term rentals in Pacific City.

• Nature-Driven Experiences: Given Pacific City's proximity to outdoor activities, guests prioritize properties that offer easy access to beaches, state parks, and outdoor recreational activities. Effective marketing highlighting such features can enhance bookings.

• Pet-Friendly Options: With a rise in pet owners traveling with their companions, properties that allow pets tend to have an edge in attracting guests seeking family inclusion in vacations.

• Quality Amenities: Modern amenities such as Wi-Fi, smart TVs, outdoor spaces, and equipped kitchens lead to higher ratings and returns. Unique features that emphasize local culture or charm (such as coastal themes) can also increase appeal.

Investors should tailor their property offerings to fit the preferences of their target demographics to maximize bookings and guest satisfaction.

The regulatory framework surrounding short-term rentals in Pacific City primarily falls under state and local legislation. Key points include:

• Licensing Requirements: Property owners must acquire necessary permits and adhere to local zoning regulations.
• Transient Room Tax: Similar to hotels, short-term rentals may incur transient room taxes, impacting overall profitability.
• Neighborhood Restrictions: Specific areas may have tailored restrictions regarding the duration and frequency of rentals, aimed at preserving community character.

Potential investors should ensure compliance with and an understanding of local laws to avoid penalties and maintain their businesses effectively.

Certain neighborhoods in Pacific City stand out for their rental potential:

• Cape Kiwanda: Known for stunning coastal views and proximity to dining and recreational options, this area frequently attracts families and couples, making it an ideal investment target.

• Nestucca Bay Area: A quieter, more rustic area that appeals to those seeking solitude or outdoor activities like fishing or hiking. Short-term rentals here may see steady demand from outdoor enthusiasts.

• Downtown Pacific City: Boasting easy access to the beach and local amenities, properties in this region often enjoy higher occupancy rates, especially during peak seasons. Its community-centric feel attracts tourists looking to immerse themselves in local culture.

Investors should carefully analyze each neighborhood's characteristics to align their properties with likely guest demographics.

Looking ahead, Pacific City's short-term rental market suggests favorable conditions for growth:

1. Sustainable Tourism Growth: With traveler preferences shifting towards open spaces and natural environments, Pacific City is poised to benefit from an increase in tourism.
2. Increased Accessibility: Infrastructure improvements, including roadway development and better transportation access, are likely to attract more visitors.
3. Remote Work Trends: The persisting trend of remote work post-pandemic may encourage extended stays, as individuals seek comfort away from home without sacrificing connectivity.

Investors should remain attuned to these trends to strategize accordingly and position their properties effectively.