Maxwell Drever explains best practices for those evaluating a broken hotel to affordable workforce housing conversion
The hotel industry was impacted severely by the COVID-19 outbreak, most painfully from March through December 2020 says Maxwell Drever. But as the New Year brought with it expectations of a resurgence. It also provided an opportunity for hoteliers to assess their assets and entertain the potential to make better use of them.
When enterprising individuals create new uses for distressed assets, buyers reward them. According to a recent poll, the changing economy is forcing investors and entrepreneurs. To repurpose distressed assets for more profitable uses at record rates. According to experts in the affordable workforce housing sector, this type of repurposing is now being pointed in the direction of smart hotel owners. Who has learned from the crisis and see a silver lining inside the wide-scale interruptions of the pandemic.
Challenges arise with it.
According to Maxwell Drever, converting a broken hotel into an affordable workforce housing development may be a brilliant idea that pays off spectacularly for many seemingly independent parties. it can also be a treacherous path forward for inexperienced developers fraught with pitfalls. Investors are aware of this fact, and looking for persuasive reasons to back conversions and alleviate their concerns. The good news is that nonrecourse loan funding is beginning to be available for these types of initiatives. Pricing for loans of these types determines by leverage. The quality of the developers, the locality, and the developer’s business strategy.
Facilities that are already in service
While all hotel rooms are equipping with bathrooms, fewer come with kitchens. That said, interior renovations may be necessary to convert a functional hotel room into a marketable apartment. This challenge is similar in a sense to the one faced by developers who repurpose office towers into residential apartments. Guaranteeing that a tower’s construction sufficiently designs to manage the conversion to apartments is of course a risk. Most transformations involve the virtual demolition of the entire structure for conversion to traditional apartment sizes and shapes. Different building codes apply all around the country. So elements like sprinkler systems, smoke detectors, barriers, and access point considering during the conversion process.
Permits, Codes and Hazards
That said, broken hotel to affordable workforce housing conversions may simply need slight alterations to the original building design. It just depends on the circumstances surrounding the conversion. Understanding this requires considerable developer expertise. Deep knowledge of local codes, and an understanding of where local planning commissions are and are not willing to bend. Early discussions with local municipalities can save developers enormous amounts of time and money.
But in the end, the informed business decisions that developers make regarding conversion value lay with elements. Such as asset quality and marketability, site appropriateness, funding structures, and environmental hazards. While hazards come in many forms and are an unavoidable element of converting a building. Smart developers plan for any and all eventualities – risk reduction strategies are always vital.