Many Hotels Have Become Affordable Housing

By Published On: May 5, 20214.9 min read

The Prince George Hotel in Dumbo, Brooklyn, a stately building that was built in 1904, was once a place where upscale business tourists visited New York.

Now, the century-old building that’s listed on the National Register of Historic Places, has become a place for good over the past 20 years. It has helped fill over 400 units of affordable housing for low-income and formerly homeless adults, as well as people living with HIV/AIDS.

With hotels struggling and office towers dwindling, why not? The Prince George Hotel is not alone, as a number of hotels are turning their hotel rooms into tiny, affordable apartments (since individualized plumbing is already taken care of, it makes it easier to convert from hotels than offices).

“The hotel industry is the most stressed industry in the commercial property sector, due to the near total evaporation of revenues since March 2020,” said Vijay Dandapani, the president of the Hotel Association of New York City. “With no prospect of a meaningful revival for another three to four years, the Governor’s proposal that seeks to make it easier for owners and operators of hotels to maximize the value of their severely negatively affected assets will be welcomed by many.”

A new bill is being developed in New York to acquire hotels. This distressed property conversion fund could give the hotel properties to nonprofits like Breaking Ground, who renovate hotel rooms into micro apartments for low-income residents and the former homeless. They’ve already turned the Prince George Hotel into affordable housing, are in talks with hotels in the Theater District in Midtown Manhattan and have worked on hotels in the Flatiron District and Chelsea, among others.

“Tourism and the hospitality industry; everybody expects that it is going to come back,” said Brenda Rosen, CEO of Breaking Ground. “And that’s wonderful and that’s what we all want, but in the meantime, there is a silver lining. We could be helping New Yorkers in need and we just can’t miss that opportunity.”

Breaking Ground doesn’t just build and operate housing, they claim to create neighborhood assets that promote social inclusion.
A spokesperson from the nonprofit said, “Our buildings preserve historic landmarks, transform neglected properties and introduce new resources and opportunities to surrounding communities. The residences we build and operate provide permanent homes for vulnerable individuals and our model works best when we are part of the very fabric of the neighborhood.”

Namely, they’ve worked to transform the Times Square Hotel in Midtown, a dilapidated, crime-ridden building, into safe, affordable housing with on-site clinical support and employment services for its residents. This is one example of how Breaking Ground has helped revitalize the Times Square neighborhood, while introducing a new approach to addressing homelessness.

interior of former times square hotel

This is the interior of the former Times Square Hotel.

That’s not to say the neighbors agree. Just look at the Upper West Side, where the Lucerne Hotel was turned into a homeless shelter by the NYC Department of Homeless Services in July 2020. The building housed over 250 homeless men before a judge ruled to evict them.

lucerne hotel facade

The Lucerne Hotel

It’s still a hot topic. New York’s mayoral candidates are lobbying to turn a number of hotels and office towers into housing. Among them, Maya Wiley wants to turn hotels and commercial space into supportive housing for the homeless struggling with mental health problems and drug addiction.

Meanwhile, Andrew Yang supports the Rental Assistance Demonstration program that allows public housing agencies to leverage public and private debt and equity to reinvest in the public housing stock. Yang claimed it would create over 300,000 jobs in New York and would provide relief and grants to landlords.

In Austin, the city has plans to turn the Candlewood Suites Hotel into housing for the homeless this spring. Lawmakers in Oregon plan to repurpose hotels and motels that have suffered from the pandemic into housing that will help the homeless and those without homes, many due to the wildfire season.

In March, the Executive Hotel Pacific in Seattle was converted into a residence with 140 people moving into the hotel, with help from the Low Income Housing Institute. California, too, is converting hotels and other vacant buildings to help out over 8,000 homeless people as part of the Homekey program, which provided over $800M to help California cities purchase properties and convert them into housing with supportive services. Since it launched last summer, the granting programs have helped create roughly 6,000 living units (among them, the Hotel Diva in San Francisco).

Are Offices Next?

It isn’t just hotels being turned into housing, but vacant office towers, too. Office vacancies in New York City rose to their highest-ever rate of 16.4%, while one-fifth of all San Francisco’s office spaces still sit empty. Nonetheless, experts claim that hotel to housing conversions are still more popular, due to plumbing in each hotel room, versus the expensive renovation it would cost to convert offices into living space.

We know that as part of Governor Cuomo’s State of the State Address, his proposal included converting underutilized commercial space to much-needed housing.

“As the COVID-19 pandemic has unfolded, New York, like states across the world, must reimagine how central business districts will succeed and thrive in the 21st century,” said James Whelan, the president of the Real Estate Board of New York. “New York will remain a global commercial hub by instilling a 24/7 environment in its central business districts, which will simultaneously strengthen its retail and small business sectors, create ‘walk to work’ environments and provide much needed housing and affordable housing.”

“This forward-thinking approach will make such areas even more attractive to cutting edge businesses and their employees,” he adds. “We look forward to continue to drive New York’s recovery forward and ensuring that our state emerges from this generational crisis even stronger.”

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