Most people are familiar with traditional hotels and high-rise luxury apartment complexes dominating the landscape, particularly in urban areas. But these types of large commercial properties can saturate a market when the supply outweighs the demand for this type of commercial lease. These commercial properties often cannot adapt fast enough to the changing markets. Now, though, there is a lesser-known commercial property finding much success in these markets.
The new trend in commercial properties comes in the form of extended stay facilities. These facilities are set up for longer stays then a typical hotel visit, and come with all the comforts and homey feel of renting an apartment. These properties are designed to serve the needs of visitors in town on business assignments, visitors on lengthy stays for medical procedures, visiting professors at Universities and others moving to urban areas for new jobs in need of quick housing options. These extended stay facilities appear to have carved out a successful niche in the commercial real estate market.
Developers have found success with these types of properties all over Philadelphia, with plans for more such facilities to open in the near future. Taking already existing or newly built apartment complexes and turning even a portion of the property into this type of extended stay housing allows these businesses to quickly adapt to changing market needs and take advantage of this new trend.
This is precisely what is happening with the East Market hotel going up in Center City, of which 23 floors of the apartment tower will be set aside for extended stay housing. This section is set to open to apartment tenants and hotel guests in 2018. The company spearheading this project already successfully operates several extended stay facilities throughout the city responding to the influx of jobs in the area over the past decade. The success of these properties is evidenced by the consistently high rates of occupancy.
This trend allows commercial property investors to adapt quickly to the ever changing needs of the market. However, as with any commercial property, these real estate deals hinge on high-stakes financial transactions and detailed contracts, and often have a plethora of legal considerations such as zoning laws. For these reasons, it is important to have an attorney who is familiar with commercial properties and knowledgeable about commercial leases to assist in these transactions.
Source: Philadelphia Inquirer, “East Market apartment tower turns part Roost hotel, as guests embrace longer-term stays,” Jacob Adelman, Nov. 27, 2017