Responding in part to market economics dictated by Covid-19, hotels and motels across the country are increasingly being re-purposed into apartment and multi-family properties.
Perhaps the most visible project is the Harrah’s Reno Hotel and Casino, which is currently in the process of being converted into a property that will include office and retail space, as well as multifamily housing.
The $5 million Harrah’s project is seeing the hotel’s 530 rooms turned into 530 apartment units, with 150,000 square feet of office space and another 78,000 square feet of retail.
Los Angeles-based George Smith Partners’ Davies Group is in the process of arranging the financing to convert part of a hotel in Salt Lake City into studio apartments.
Meanwhile, the Vivo Investment Group, specializing in converting low-demand hotels into apartment complexes, has this year taken on extensive hotel conversion projects in Mesa, Arizona; South Bend, Indiana; and Winston-Salem, North Carolina.
The company has also just announced plans for the purchase of another hotel, this one in San Antonio, which will also turned into apartment housing.
Such conversions, observes the Wall Street Journal, are a “symptom of the turmoil the pandemic has caused in the hotel sector. Many properties are shut down or running steep losses because of a drop in travel.”
But those involved in the conversion business say challenges in the industry include complying with local residential building and zoning codes.
Speaking earlier this year with the site GlobeStreet.com, Richard Rubin, chief executive officer of the Los Angeles-based Repvblik, which has converted a former Days Inn in Branson, Missouri into an affordable housing complex, also noted that not every hotel property is the same.
“It’s not a simple formula because it depends on the vintage of a hotel and the style of building,” said Rubin.
Generally speaking, say some contractors, newer hotels and motels are more cost-effective to convert than older ones; while properties with two stories or less are more appealing than high-rises.
Repvblik is currently in the process of converting some two thousand hotel rooms into apartment units.
By Garry Boulard
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