As affordable housing becomes more scarce nationwide, developers are buying distressed hotels and turning them into apartments. Nationwide, 18% of hotels are behind on their mortgages as of Dec, 2020.
“Apartments around here, you might pay $120,000 a door, and we can purchase these hotels probably $30,000 to $40,000 a door, and maybe put $10,000 a door into the renovations,” said David Peters in Minneapolis.
Greg Willett, the chief economist at RealPage says “Land and construction costs preclude virtually any construction of new market-rate product at that Class C price point.” “Class C housing stock is now 96% occupied nationally and 99% occupied in the Midwest.”
This nationwide trend appears to be another opportunity for affordable housing in addition to California’s recent Auxilliary Dwelling Unit regulations.
The Juliana Lee Team’s JLee Realty office in Palo Alto, like many businesses on El Camino Real, has several hotels near it. The large Cabana Hotel next door in the Crowne Plaza and the smaller Oak Motel across the street have mostly empty parking lots. A new hotel is also being developed adjacent to the JLee Realty office building.