Site To Do Business
Recapturing the Magic
One CCIM designee helped a client find financing and acquire an Orlando-area hotel for conversion to multifamily housing.
A year after COVID-19 came to dominate all aspects of life in the U.S., it’s easy to draw a distinction in the world as pre-pandemic and post-pandemic. But Ken Pierce, CCIM, CIPS, can trace one major deal directly to those fretful days when schools were closing, events were
getting canceled, and toilet paper was flying off the shelves.
Pierce, owner of Orlando-based Pierce Florida Realty, had a client scheduled for a closing on March 13. The property was an old hotel with Pierce’s client aiming to convert it to boutique studio apartments targeted at hospitality and entertainment workers for Disney World
and other tourist destinations in the area.
“Literally, it was in that time frame when everything began shutting down,” he says. “We weren’t even sure, frankly, whether the bank was going to go ahead and pull the trigger.”
But the deal was completed — thanks in part to the research done by Pierce through Site To Do Business. Detailed demographic information and transportation data allowed Pierce’s client to bolster its business plan, which helped with the underwriting of the financing.
“The targeted tenants are primarily the resort workers, people from Disney and Universal properties, and those working in surrounding hotels and restaurants,” Pierce says. “The data we collected was invaluable because the assumption was that a lot of these people would depend
on public transportation to and from work,” he says. “We basically dropped a marker in the middle of Kissimmee and did half-mile, one-mile, and two-mile searches.”
Pulling the profiles of the surrounding neighborhoods by income, age, homeownership, and other categories, Pierce quickly narrowed an initial shortlist of 10 properties to one ideal candidate. After the March closing, development on the adaptive reuse project stalled as the coronavirus shut down Florida’s economy. But construction resumed in the summer of 2020, with the first units expecting to be on the market by April 2021.
“After the initial shutdown, my client was able to get back to work,” Pierce says. “Converting an older hotel property to new apartments can be intense, having to replace so much and convert the units from hotel rooms to a multifamily property.”
The pipeline of hotels-to-multifamily conversions may be widening in the wake of COVID-19, but it was an established trend well before the virus upended daily life in 2020. The Orlando area was flush with aging hotels during the real estate boom leading up to the Great
Recession of 2008-2009. Developers were converting hotels built in the 1970s and 1980s into condominiums — only to be caught in the cold when the bubble burst.
“After that first wave of revitalization, things slowed down a bit,” Pierce says. “But investors are again looking at these types of possibilities. I’m expecting tourism to come back in a big way as vaccinations continue and we near herd immunity. People have been stuck
inside for a year — and what’s one of the first places they’ll want to go? Orlando has to be on top of that list with Disney World and Universal Studios.”
This adaptive reuse project highlights an interesting fold in the commercial real estate market as it continues to react to the COVID-19 pandemic. The conversion repurposes an outdated hospitality property to address expected demand for workforce housing by people in the
travel and leisure industry. While such retrofitting may become more common in the near future, Site To Do Business can continue to deliver data and infographics for CRE professionals to identify and enable the repurposing and revitalizations of these sites.
For more on this topic, check out Site to Do Business for commercial real estate professionals.