Orlando Suburb Leads Nation in Hotel-to-Resi Conversions

As office-to-residential projects proliferate across the country in response to a decaying office sector, one Orlando suburb is mastering the art of a different kind of conversion.

Kissimmee, about 30 minutes south of Orlando, leads the nation in hotel-to-residential conversions, with eight hotels being transformed into 1,888 apartment units, the Orlando Business Journal reported, citing RentCafe. Many of the Kissimmee projects are geared toward affordable or supportive housing.

Nationwide, repurposed hotels accounted for 36 percent of all residential conversions last year, yielding 4,556 apartments. That marked a 38 percent jump from the previous year and increase of nearly 100 percent since 2021.

Notably, apartments converted from hotels outpaced those converted from office buildings, which accounted for 28 percent of adaptive reuse projects last year. Office-to-resi projects created 3,587 apartments last year, up just 3.8 percent from 2022 and down 17 percent from the year before that.

While record-high vacancies and mounting distress spotlight the beleaguered state of the office sector, the hospitality industry has also struggled since the pandemic caused leisure and business travel to plummet. Hotels bounced back last year, but revenues and occupancy rates still pale in comparison to pre-pandemic levels.

“Unsurprisingly, outdated hotels bore the brunt of reduced traveling and steep debt service costs, prompting many owners to offload their underperforming properties,” RentCafe’s report said. “Naturally, this created an opportunity for developers to swiftly repurpose these properties into apartment buildings, especially in places boasting a large number of hotel properties.”

Of Kissimmee’s 1,888 apartments stemming from repurposed hotels, 994 are under construction. Among the eight properties targeted for conversion are the Crown Motel at 3834 West Vine Street, which Hope Partnership is turning into 30 studio apartments. Another is a former motel at 1515 Hollywood Street, which will provide temporary housing for those experiencing homelessness, the outlet reported.

—Quinn Donoghue