This is the first post in a series we’re calling “Under New Management”, highlighting the properties and projects that homeowners, investors, and real estate developers are trusting us to manage and care for. The latest addition to our expanding portfolio is a 352-unit multifamily property in Kissimmee, Florida. This conversion project is part of a growing trend in real estate where underutilized hotels are repurposed into much-needed multifamily housing. With this project, Atrium continues to strengthen its presence in the Central Florida market, bringing our unit count to over 600 in Kissimmee and 4,000 in Orlando.
This deal, which marks a significant addition to our property management portfolio, showcases our continued commitment to addressing the region's increasing demand for workforce housing. Here’s a closer look at the project’s details, our plans for the property, and how this deal came together.
Project Overview: Reimagining a Hotel as a Multifamily Property
The property, formerly a 435-room hotel located near Disney World, has undergone a $14 million conversion to become 352 multifamily micro-units, predominantly studios. The project aligns with the broader trend of converting hotels into apartment complexes, which has gained significant traction in recent years. These conversions are particularly common in tourist-heavy areas like Kissimmee, where housing demand is surging.
The redevelopment involves transforming existing hotel rooms into studio and one-bedroom units, capitalizing on the building’s existing layout. Most hotel rooms already have basic infrastructure in place, such as plumbing, kitchens, and bathrooms, making the conversion process more cost-effective and quicker to execute than new construction.
This trend isn't unique to Florida, but it has gained momentum in the area, particularly around tourist destinations like Disney World and Universal Studios. Cities like Kissimmee and Orlando are experiencing an influx of workers in need of affordable housing options, and hotel-to-multifamily conversions provide an effective solution.
Why Converting Hotels to Multifamily is a Smart Investment
The conversion of hotels to apartments represents a growing trend in real estate, particularly in the wake of the COVID-19 pandemic. As hotel occupancy rates plummeted in 2020 and 2021, developers saw an opportunity to repurpose underperforming hospitality properties to meet the demand for housing.
According to a JLL report, hotel-to-multifamily conversions are expected to represent between $25 billion and $30 billion in market value over the next five years. Florida, with its booming tourism industry and population growth, is uniquely positioned to benefit from this trend.
For Atrium, this type of project makes sense for several reasons:
Cost Efficiency: Converting existing structures is more cost-effective than building new developments from the ground up. Hotels already have kitchens, plumbing, and other necessary amenities, making the conversion process faster and less expensive.
Zoning Flexibility: Hotel properties often have favorable zoning regulations that allow for a more streamlined conversion process. Developers can sometimes avoid the lengthy entitlement process associated with new multifamily developments, as the property’s commercial use is already established.
Addressing Housing Shortages: The Central Florida region, particularly near tourist hotspots like Kissimmee and Orlando, is experiencing a housing crunch. By converting hotels into multifamily housing, developers like Atrium can help meet the demand for workforce housing, providing affordable living options for local employees.
Location, Location, Location: This property’s proximity to Disney World and other major attractions makes it a prime candidate for workforce housing. Employees working at nearby resorts, restaurants, and entertainment venues can benefit from living close to their jobs without having to pay premium rents in more expensive areas of the city.
Stabilizing the Property: Atrium’s Plan for Success
Our primary goal for this project is to stabilize the property for the lender. The property was referred to us through an existing relationship, and our extensive property management experience makes us an ideal partner to take over this conversion. With over 4,000 units under management in Orlando and 600 units in the Kissimmee market alone, we have a proven track record of maintaining and optimizing multifamily properties in this competitive market.
By stabilizing the property, we ensure that it achieves its full operational potential, delivering consistent returns for the lender while providing a high-quality living environment for residents. Stabilization involves ensuring high occupancy rates, maintaining the property’s infrastructure, and delivering efficient property management services that meet both resident and investor expectations.
Our efforts will focus on optimizing tenant retention, maintaining the building’s core infrastructure, and ensuring the property meets the financial goals set out by the lender. Given our extensive experience in the multifamily space, we are confident in our ability to not only meet but exceed these expectations.
The Road to Closing: Challenges and Successes
This project took six months to close, with negotiations starting in April. While hotel-to-multifamily conversions are increasingly popular, they come with their own set of challenges, particularly when it comes to aligning the expectations of all stakeholders involved. Working with a lender group based in the Bahamas added a layer of complexity to the negotiations, but our team worked diligently to ensure the deal went through smoothly.
The complexity of the deal, combined with the tight timelines and the unique structure of the property, made for an exciting and rewarding challenge. Ultimately, the combination of our experienced team, our relationship with the lender, and our expertise in multifamily property management allowed us to close the deal successfully.
The Growing Trend of Hotel Conversions in Florida
According to industry reports, the demand for affordable housing continues to rise, especially in areas like Florida where population growth remains steady and housing shortages persist. This trend is particularly prevalent in Central Florida, where tourism and hospitality are major drivers of the local economy. Hotels located near major tourist attractions are now being repurposed into workforce housing, which is sorely needed as many employees are priced out of traditional housing markets.
Several factors are contributing to this trend:
Post-Pandemic Recovery: The hospitality industry was one of the hardest hit by the pandemic, and many hotel operators are still struggling to return to pre-pandemic occupancy levels. Converting hotels into multifamily properties helps owners recoup their losses by providing a steady stream of rental income.
Rising Housing Demand: Central Florida continues to experience significant population growth, with more people moving to the region for its job opportunities, favorable climate, and overall quality of life. However, the supply of affordable housing hasn’t kept pace with this demand, making hotel conversions an attractive option for developers.
Cost-Effective Development: Converting a hotel into apartments is often more cost-effective than building a new multifamily property from the ground up. The existing infrastructure, including plumbing and electrical systems, can be repurposed for residential use, saving both time and money.
A Look Ahead: What’s Next for Atrium Management Company
The addition of this 352-unit property is just the latest milestone in our growth story. With 4,000 units under management across the Orlando metro area and a growing presence in Kissimmee, we are well-positioned to continue expanding our portfolio in Central Florida.
Our focus remains on providing high-quality property management services that meet the needs of both investors and residents. As we continue to grow, we are always looking for new opportunities to bring value to our clients, whether through hotel conversions like this one or through new multifamily and single-family development projects. We’re excited to continue our work in creating high-quality, well-managed housing solutions for the Central Florida community.