2022 Summer Issue - 47

adding that TWG builds or renovates projects to
the National Green Building Standard but meets any
level of sustainability that state and local governments
require.
" The physical challenge is mostly about the
layout of each unit and ability to convert that to a livable
apartment space, " he says. Kelly suggests that
these projects work best in urban markets with high
demand for studio apartments because it is difficult
to make the hotel conversion model work in markets
like the Midwest, where apartment units are significantly
larger than 500 square feet (46 sq m).
The Durango project also required upgrades for
residents with disabilities because the hotel was built
before current ADA requirements were enacted, Kelly
adds, noting that 5 percent of the units were customized
for visually impaired seniors, so the project had
to accommodate this need with features like oversized
elevator buttons.
Like TWG, MRK Partners, a Los Angeles-based
development and planning firm specializing in
affordable housing, has faced zoning hurdles.
The firm recently converted a 140-key Hyatt House
extended-stay hotel into Hillside Senior Apartments
in Gaithersburg, Maryland, which was funded with a
combination of low-interest, tax-exempt bonds, and
LIHTC equity.
" Obviously, extended stays with existing kitchens
tend to work best from an overall financial and layout
standpoint, " says Sydne Garchik, principal at MRK,
noting that the cost to adapt Hyatt House, which
provided 140 one- and two-bedroom units, was well
below replacement cost. She says that her company
is seeking similar opportunities in Maryland, Virginia,
and South Florida in locations with access to transit
and job centers.
MRK incorporates as many sustainable improvements
into projects as possible. The Hyatt project
switched units from gas to electric, installed solar
systems, upgraded lighting to LED, and replaced
plumbing fixtures with low-flow alternatives. " We
believe in sustainability for the communities we serve
and the economic benefit of transactions, " Garchik
says, " and we will continue to push such initiatives
going forward. "
The main challenge with this project was securing
a zoning amendment from the city, but surprisingly it
provoked a lot of pushback from the community due
to its " affordable " status. Garchik says that lease-up
also took longer than predicted because Montgomery
SUMMER 2022
URBAN LAND 47
County, Maryland, is very affluent, so there aren't
many low-income residents. " Luckily, we were able
to take advantage of income averaging, which qualified
households at a little higher income from nearby
communities to improve pace of lease-up. "
A Workforce Housing Solution
Older traditional hotel properties are great candidates
for conversion to housing because they have larger
rooms than those found in new hotels. They also
can have extensive amenities that renters are willing
to pay a little extra to get but can be provided at a
substantially lower price point than in new marketrate
apartments. Davies suggests that this is helping
to drive growth in hotel conversions to market-rate
housing.
Last year, two luxury Sidney hotels with many
amenities, for example, were sold to residential
developers for conversion to housing. The Vibe Hotel
in the city's Rushcutters Bay area will contain a mix
of residential and hotel uses and feature 125 for-sale
units, and the former 203-key Bayview on the Park
hotel in Melbourne is being converted to 300 residential
units for essential workers.
As bargain-priced extended-stay hotels become
scarce, U.S. developers are beginning to look at other
options for creating market-rate workforce housing.
The renovated lobby at The
Studios at Hotel Berry includes a
space to provide residents with
supportive services and serves as
a place for socializing.
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2022 Summer Issue

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