Credit: Rebecca Wright
Credit: Rebecca Wright
Renters might be able to move into former hotels in Peachtree Corners in the future, albeit without a housekeeper to turn down their room.
City officials unanimously approved an ordinance in late May that will allow developers to convert declining hotels into upgraded apartments.
At least one real estate developer that hopes to turn hotels into apartments in three other metro cities said it will consider doing the same in Peachtree Corners.
Staff in the Gwinnett city crafted the ordinance in case local hotels decline in quality or shut down due to lost revenue from fewer bookings during the pandemic, said Diana Wheeler, community development director for the city.
“We’re trying to be proactive and trying to look out for the community’s best interests by anticipating problems and trying to divert them, so that we don’t have them in the future,” said Wheeler, who helped write the ordinance.
Financially strong hotels will likely bounce back from the year-long revenue loss as people begin to travel again, Wheeler said. But smaller hotels with less resources might not make it, she said.
A couple of Peachtree Corners’ 13 hotels and motels are at risk of losing their national brand, Wheeler said. The city worries that some declining hotels could cease to exist or turn into extended-stay hotels that act as transient housing associated with crime and other unwelcome activity, she said.
“Rather than having empty buildings, we’re creating a way for impacted hotels to find another use,” Mayor Mike Mason said in an email. “It offers another alternative to hotel owners, rather than bankruptcy, and keeps jobs and spending in the community.”
Since officials passed the ordinance, a few real estate developers have shown interest in converting underperforming hotels into apartments, including Utah-based PEG Companies.
PEG reports $1.2 billion in real estate holdings and owns multi-family housing, hotels and office buildings across the U.S., said PEG Senior Associate Alex Murphy.
Since 2018, the company has converted hotels, mostly of the extended-stay variety, into apartments, Murphy said. Its apartments mostly target middle-income earners but some have an affordable housing component, he said.
The developer is in preliminary talks to purchase at least two hotel properties in Peachtree Corners to turn into apartments, Murphy said. It’s still too early to disclose which properties, he said.
Sandy Springs rejected a rezoning request last week that would allow PEG to convert an extended-stay hotel into low-income apartments. The company will be allowed to redevelop a Buckhead hotel into apartments, and it will seek rezoning on a Smyrna property within a few years, Murphy said.
It’s cheaper to repurpose existing buildings into workforce housing rather than building from the ground up, Murphy said. The company has had no problem finding hotels to convert, as sellers have reached out to PEG throughout the pandemic to gauge its interest in buying, he said.
Under the ordinance, hotels in Peachtree Corners are eligible to be converted into apartments if occupancy levels fall below 50%, if their brand is downgraded or if they are an extended-stay hotel.
City officials will give special-use permits for apartment-hotels only if they maintain the same number of units and density and come with landscape enhancements. They would be required to participate in crime-free housing programs, like running background and credit checks on tenants.
The owners of the converted hotels must also add updated lighting, paint, flooring, kitchen cabinets and appliances to the units. The apartments would have in-unit washers and dryers.
The ordinance does not require any specific price range for monthly rent.
Most people pay anywhere from $1,000-$1,500 per month for an apartment in Peachtree Corners, according to RentCafe. Many hotels in Peachtree Corners only have one bedroom, which could give single renters who work in Technology Park somewhere to live in their price range, Wheeler said.
“It won’t work in every case, but it’s a tool we can use to retain and support the business community,” Mason said. “... We’ll be examining each request on a case-by-case basis to make sure the location of the hotel and benefits to the community are consistent with our expectations.”
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