If you find yourself with a batch of lemons, the wise move is to make lemonade.
What if you’ve got hotel properties in a down hospitality market? Luckily, you’ve got some choices.
For example, California-based Vivo Living, which turns hotels into multifamily properties, announced at the beginning of September that it opened its tenth “boutique efficiency apartment” complex. They come both furnished and non-furnished. Such hotel standards as free Wi-Fi, lounge areas, pools, and gyms become amenities. The company claims more than 1 million square feet of properties with more than 10,000 apartment units.
”Vivo aims to reduce traffic, waste and sprawl by carefully selecting each location to be in physical proximity to shopping, markets, entertainment and other necessities,” a company press release quoted CEO Dan Norville. “We are reusing buildings versus building ground-up.”
Vivo is hardly the only company turning underused hotels into other opportunities for profit. Private equity investment firm Pebb Capital partnered with Maxwelle Real Estate Group recently to announce the acquisition of the historic Bancroft Hotel and adjacent Ocean Steps commercial building in Miami Beach. About half of the 100,000 square feet of indoor and outdoor space will become a “super Class A” office offering fitness/wellness and food and beverage for a commercial use high-end concept property.
“With the current market, many real estate owners are finding that speed to market is essential today,” John Cerra, founding principal of CetraRuddy Architecture, which has done more than 40 conversions of offices, hotels, industrial lofts, and more, tells GlobeSt.com. “Turnaround time is now a key factor, and many developers are looking for strategies to create successful conversions through minimal interventions.”
“The key evaluative criteria for these projects are floor layout and egress, existing plumbing, number and locations of elevators, and availability of vertical riser ducts, pipes or conduits,” Cetra says.
“In real time, businesses are occupying multi floors within hotels as work/ stay arrangements,” Michael Silver, chairman of Vestian, says. “Citadel recently took over a hotel in Florida which they converted into a trading floor. The trend towards converted use of hotels will continue to accommodate employees working remotely. No longer as a hotel arrangement but as an apartment arrangement or a work use arrangement.”
But it takes work. Cetra notes that zoning and building codes can be hurdles and ensuring potential profit is key. “The project has to pencil out,” he says.