EDITOR’S NOTE

We’ve often featured adaptive-reuse projects within the pages of our design content in Hotel Business and on hotelbusiness.com. Often, these properties are guest favorites, as they capture that one-of-a-kind atmosphere that travelers are seeking. An old factory-turned-hotel, or a former bank building that now houses an exciting F&B venue—it’s where the past meets present and storytelling, which is crucial to a hotel’s branding and narrative, comes alive. But what about hotels that become the subject for adaptive-reuse, such as hotel-to-apartment conversions?

I’ve seen a couple of reports in the last few days—coincidentally enough, one popped into my inbox as I was writing this—that reveal a striking shift in terms of adaptive-reuse: While office conversions might be the faves of future adaptive-reuse projects, it was hotel conversions that took center stage in 2023. As such, hotel-to-apartment conversions, for the first time ever, has become the headliner, overtaking offices last year, according to RentCafe’s Adaptive Reuse Report. (Quick side note: Office conversions are sending conflicting signals amid the uncertainty over the future of office space. Completions saw only a slight uptick from the previous year, while future projects keep accumulating in the pipeline, with a record-setting 58,000 upcoming office-to-apartment conversions).

According to the report, the overall number of adaptive-reuse projects has strongly rebounded. More than 12,700 new apartments were converted from unused buildings throughout 2023, representing a 17.6% increase from the previous year. Drilling that down a bit in terms of our industry: Adaptive-reuse projects from former hotels now represent 36% of all conversions completed nationwide, with an all time-high of 4,556 converted apartments (a roughly 39% uptick since the previous year and almost double the volume of 2021). The majority of these new apartments (60%) came from Class B hotels, with Class A and Class C hotels only accounting for 21% and 18%, respectively, of such conversion projects.

Furthermore, Manhattan now dominates the adaptive-reuse landscape. And while the Big Apple leads in repurposed hotels, with nearly 800 new units, Albuquerque, NM, and Richmond, VA, follow with around 300 new units each coming to life from hotels.  Other noteworthy destinations? Both Florida and Las Vegas boarded the hotel-conversion train in 2023.

The report states that hotel conversions account for more than one-third of adaptive-reuse projects in the U.S., and dives into the stat a bit: “It’s not news that the hotel sector has faced many challenges and undergone transformations in recent years. Unsurprisingly, outdated hotels bore the brunt of reduced traveling and steep debt-service costs, prompting many owners to offload their underperforming properties. This created an opportunity for developers to swiftly repurpose these properties into apartment buildings, especially in places boasting a large number of hotel properties, such as New York City. And, because hotels already come equipped with essential infrastructure, these adaptive-reuse projects offer a faster and often more-cost-effective method to create housing units, particularly in dense, urban areas where space for new construction is scarce or pricey.”

For the full details and data of this report, you can check it out at rentcafe.com.


To see content in magazine format, click here.