As mixed-use developments evolve, hotels are following suit.
Shifts in consumers’ habits and lifestyles have driven developers to rethink how residential and hospitality projects go hand-in-hand. Offering more flexibility plays a big role in that, said panelists at Columbia University’s Real Estate Development Conference.
He pointed to the Pod Hotels’ Times Square, which offers micro-apartments for short-term leasing. The furnished apartments are available to book instantly and lease for periods like 30, 60 and 90 days. Born characterized the offering as a hybrid that’s “in between living in a hotel and an apartment.”
There will be more experimentation along those lines, he said, given that many people have jobs that make them more “nomadic,” and they no longer want to commit to year-long leases. It’s a natural result of a new cultural landscape, said Cia Buckley Marakovits, chief investment officer at Dune Real Estate Partners.
“We’ve gotten accustomed to choices,” she said. “Real estate has always reflected, since the dawn of time, what’s happening in the community.”
Condo buyers, for example, have higher expectations of hotel-like amenities. These approaches to mixed-use development — whether it’s residential components, retail space or something else entirely — can also complicate how lenders evaluate projects. Profits from the residential portion of a building, for example, can help to offset its hotel business, said Mark Lanspa, executive vice president of hospitality at Wells Fargo.
“You look at the sum, but also split apart what they’re each worth,” he said. “Does the whole package work?”
The willingness to take on more risk will often come down to the management teams.
“We never end up where we thought we would,” Born said. “Hotels are great opportunities, but they’re also great risks.”