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The Residence Inn Marriott, shown here in Fort Collins, Colorado on Thursday June 3, 2021, is one of two hotels a developer is looking to convert into apartments. (Photo: Bethany Baker / The Coloradoan)
An Austin, Texas real estate company has proposed converting two Fort Collins hotels into apartments to take advantage of both the city’s housing shortage and sharp drop in hotel occupancy.
Firmus Equity Partners representatives met with city planners on Wednesday to present preliminary plans to convert the Residence Inn and Courtyard Fort Collins at 1127 and 1200 Oakridge Drive, respectively, into studio, one and two bedroom apartments.
Firmus has a sales contract for the hotels south of East Harmony Road and the proposal is to convert 225 rooms into 239 apartments, as submitted to the city.
Firmus officials did not respond to emails or phone calls asking for comments.
It is the first time that Fort Collins has presented a plan to convert a hotel into apartments, said city planner Kai Kleer. “However, this type of proposal is part of a much larger trend emerging in the wake of the
Covid19 pandemic. The hospitality industry has been hit hard and the market is looking for a way to rebalance. ”
The Courtyard Marriott, shown here in Fort Collins, Colorado on Thursday June 3, 2021, is one of two hotels a developer is looking to convert into apartments. (Photo: Bethany Baker / The Coloradoan)
Since the COVID-19 pandemic, hotel occupancy has dropped to 44.2% by April, according to the Rocky Mountain Accommodation Review. In April 2020, when much of the world was closed due to the virus, the occupancy dropped to 41% from nearly 60% in 2019.
Hotel prices also fell from nearly $ 109 per average night in the first four months of 2019 to $ 92.58 per average night in the same period in 2021. The all-important revenue per available room fell from 64.97 US dollars in 2019 to $ 40.96 this year.
The Wall Street Journal reported in December that investors are trying to take advantage of hotels’ difficulties to turn them into rentals.
Elan Gordon, director of real estate investment company SHIR Capital, which has converted hotels into hundreds of homes in South Carolina and Texas, told the Journal the business plan works best in markets where rental prices for studios in new buildings are above $ 1,000 in the month. Hotel room size studios can compete with these apartments with a 20% discount on rent.
New studio apartment rentals in Fort Collins are typically in excess of $ 1,000 per month. Studios in the Cycle Apartments start at around $ 1,300.
Long-stay hotels are best for the conversion, Gordon told the Journal. Although they are usually smaller than the average apartment, they have bathrooms and kitchenettes built in.
Firmus’ proposal would require approval from the town planning and zoning commission and require a change to the city’s parking requirements, Kleer said. Preliminary plans show between 30 and 60% less parking space than the city would normally need for an apartment building project of this size, he said.
The city allows changes to its park regulations under certain conditions, even if the development alleviates a defined need of the community such as affordable housing.
“The developer has shown interest in providing affordable housing, but it is not clear what that would look like,” said Kleer.
Every hotel currently has an electricity meter, but the city requires each apartment building to have its own meter, said Alyssa Stephens, the city’s neighborhood development officer. That and the parking space requirements could be major sticking points for the project, she said.
Pat Ferrier is a senior business, health, and growth reporter in northern Colorado. Contact them at email@example.com. Please support their work and that of other Colorado journalists by subscribing today.
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