CRE companies find new purposes for old hotels
Featured in the Connected Real Estate Magazine on 7 October 2021.
The hospitality sector’s downturn has inspired companies and commercial real estate owners to find alternative uses for hotel properties. California-based Vivo Living is one example. The company transforms hotels into multi-family properties and recently announced it opened its 10th “boutique efficiency apartment” complex, GlobeSt reports. Vivo Living offer furnished and non-furnished units and amenities expected with a hotel stay like free Wi-Fi, pools and gyms remain in place.
“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,” Vivo CEO Dan Norville said in a statement. “We are reusing buildings versus building ground-up.”
Hotel conversion becoming a popular trend
Private equity investment firm Pebb Capital and Maxwelle Real Estate Group teamed up to purchase the Bancroft Hotel and the nearby Ocean Steps commercial building in Miami Beach, GlobeSt reports. The companies plan to turn approximately half of the 100,000 square feet of indoor and outdoor space into a “super Class A” office that offers fitness/wellness and food and drinks 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 Cetra, founding principal of CetraRuddy Architecture, which has done more than 40 conversions of offices, hotels, industrial lofts, and more, told 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.”
“In real time, businesses are occupying multi floors within hotels as work/ stay arrangements,” Michael Silver, chairman of Vestian added. “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.”
Shifting hotels’ purpose appears to be an ongoing tread, for at least as long as the COVID-19 pandemic impacts the hospitality industry, if not longer. Earlier this year, co-working space provider The Yard announced it was going to turn a defunct Courtyard by Marriott hotel in New York into a flexible office space with 180 private offices, conference rooms and co-working spaces, while the former hotel’s gym and rooftop bar would remain as office amenities.
Creating new uses for hotels while the hospitality industry struggles is logical, but it doesn’t make the process any easier. Cetra noted that every project faces roadblocks like zoning and building codes. The conversion also needs to be profitable to make the venture truly worthwhile.
“The project has to pencil out,” he told GlobeSt.
