As the occupancy rates around the country have dropped due to the pandemic, hotel owners and operators are taking a look at new ways that they can fill their rooms. Many of them are beginning to look at adding multifamily residential units to their properties to guarantee that they always have spaces occupied.
With many condominiums and luxury apartments adding more hotel-style amenities, it just makes sense for hospitality properties to extend their offerings to the renters who want them.
Jared Bradley, president/founder, The Bradley Projects, has worked with several brands, including Ritz-Carlton in Nashville, TN and Austin, TX, on projects that include both hotel and residential space. “The reason we are seeing more interest in multifamily condo-hotel conglomeration is because, quite frankly, I think everyone at every level is looking for grander, more meaningful amenities, and I think that for so long, the higher-end hotel brands like a Ritz-Carlton, for example, have the world’s finest amenities,” he said.
Bradley has seen the developers of the multifamily projects he was worked on trying to keep up with the hospitality industry. “At the end of the day, when people travel and stay in a really nice hotel, everyone typically enjoys all of the amenities that come along with that, so if you can create that in multifamily, you are going to be ahead of your competitors,” he said.
These types of residences are perfect for what he calls a renter by choice. “A renter by choice is someone who doesn’t want to be bogged down by owning a piece of real estate,” he said. “They want to be able to move around and have a place here and have a place there and not be over-committed, but still be able to experience those finer things—the gyms and the restaurants and the whole nightlife vibe. That is what we are hearing and talking a lot about.”
Like much of modern culture, Bradley believes that this latest trend is driven by millennials. “They are not buying as much real estate as they are traveling,” he said. “I think that that cross-pollination of hospitality, multifamily and condo and vertically integrate that into a platform that is well branded, really brings out the opportunities for different living experiences. I think most people are really about living experiences more than they are about ownership of one little piece.”
Many of the units that are being made available for residential space are smaller than the average apartment. “They don’t have to be micro-units, but the more we can make a smaller unit multifamily feel like a hotel room, the more successful that project is going to be because we are able to provide more units at a slightly higher rent because we have designed it in a smart manner to mimic how a hotel room feels,” said Bradley. “You can use smaller spaces for multifamily by looking to the hospitality industry because people don’t complain about the size of the hotel room because everything in the hotel room works well. If you can take some of those pointers from a hotel room, you can make smaller spaces feel larger.”