Champions World Resort, a 435-key hotel and conference center in Kissimmee, Florida, will become a market-rate 352 micro-unit apartment complex in a nearly $ 14 million redevelopment, one of the many hotel-to-home conversions becoming a trend in the United States
Interior demolition began this month at the site of 8660 W. Irlo Bronson Memorial Highway, a major commercial thoroughfare in Kissimmee, located near Walt Disney World and Universal Studios in Orlando, Florida. Miami-based ICM Development Group, led by Carlos Balzola, is the development of the project – dubbed Champions Village – and BCC Construction, a division of Prospect Real Estate Development Group headquartered in New Smyrna Beach, Florida, is the general contractor. Construction is expected to take around 12 months, with the first tenants moving in late spring 2022.
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The redevelopment plan calls for the development of 233 studio apartments and 119 one-bedroom micro-units, according to Richard Zahn, Sr., president of BCC and PREDG. Zahn has completed several hotel-to-apartment and apartment-to-condo conversions in over two decades of construction and development.
Balzola’s company was also part of the recent $ 40 million conversion of the 555-room former Red Lion Hotel Kissimmee Maingate to 7,300 W. Irlo Bronson Memorial Highway. ICM has formed a joint venture with Cornerstone Property and T2 Capital Management to purchase and redevelop the old hotel into a 339-unit workforce property with 28,000 square feet of retail space. Construction began early last year and is expected to be completed shortly.
Kahn described the redevelopment of Champions Village as housing for the workforce. The completed project is expected to fill a void for workers at Disney and other resorts in the Orlando-Kissimmee market that are limited in price to other housing types in the area.
The hospitality industry and cities and resort areas across the country have been hit hard by the COVID-19 crisis, but these types of properties can be put to use. According to Kahn, this trend could “take hold wherever there is a need for quality, well-located rental properties that workers can afford.”
Interest in conversions increased in the United States during the pandemic. According to a JLL report on hotel conversions, “recent activity suggests that the total market value of hotels sold for conversion over the next five years will be between $ 25 billion and $ 30 billion.” Conversion projects include converting hotels, often extended-stay properties that already have bathrooms and kitchenettes, into multi-family, student or senior housing.
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Mary Ann Barnett, senior general manager of affordable multi-family practice at BBG, a national property assessment and assessment company, said Multi-unit news the number of conversion agreements the practice has worked with has increased during the pandemic. The company has worked on four hotel conversions in Phoenix, two in Charlotte, North Carolina, and two in California in Salinas and San Bernardino.
Barnett expects to see more of the conversion trend, citing the challenges facing hotel operators in 2020 and increased interest in tackling the affordable housing shortage as a driver.
“Some are being converted to single occupancy housing (SRO) to meet the transitional housing needs of the homeless or to provide more affordable studio apartments on a monthly basis to individual tenants, while some are being converted to apartments. more traditional by combining hotels. units to create one, two or three bedroom units or converting hotel units for extended stays directly into apartments where the kitchens are already installed, ”said Barnett MHN.
In addition, some hotels are being converted to senior housing, as the design easily translates from a typical mid-sized hotel to senior housing with elevators and common areas on the first floor, she noted.
From a financing standpoint, it may make more sense to convert a hotel into accommodation due to rising construction costs and land prices. If a developer enters into a land use agreement, low-income housing tax credits may be available to help fund some, if not all, of the conversion costs, Barnett said. It may also be easier to convert an older hotel base to “get around some of the zoning, rights and NIMBYism issues that come with new development in some markets like Austin and Portland,” she added.