The American affordable housing crisis has become the central focus, with a large population of low and middle-income groups spending more than 30% of their earnings on home rentals. Due to this, they cannot save enough for education, healthcare, and the future says Maxwell Drever. The country’s public sector and local governments are trying to alleviate this challenge. But marketplace seems to be the primary constraint. High land acquisition and building costs prevent developers from focusing on this field because they cannot justify returns. They focus more on luxury markets. Consequently, working-class families with 60% to 120% of district median income don’t find enough options. The growing gap between demand and supply has led toa crisis.
After the pandemic, the hospitality industry was worst-hit. The escalating concerns and everyone’s concerted efforts helped find innovative solutions. It emphasized the need to build affordable workforce housing for them. However, the high cost of new construction has still been the main obstacle. Due to the pandemic, many hotels had to shut down due to reduced business or inability to pay debts. These became unusable assets. Some housing market experts like Maxwell Drever saw an opportunity to fix issues at both ends. They came up with an idea to convert rundown and closed hotels into affordable workforce housing to mitigate the housing crisis for low and middle-income households and enable hotel owners to revive their revenue.
Why is this innovative idea promising?
Adaptive reuse of the hotels into affordable livable units for the workforce has caught everyone’s attention for several reasons. The hotels have to ensure guests’ safety, comfort, and affordability. Although there can be a slight difference, hotels’ infrastructure tends to be similar to the workforce housing. Additionally, multifamily properties cost lower operating expenses than hotels. Hence, the income generated from such a model can exceed the overall hotel’s value on average.
The benefit of the adaptive use of hotels into affordable residential units
Affordable housing has gained mainstream attention in the last decade. The economic meltdown changed how rental markets behave in the US. Rental demand became higher among the upper-income households from 2010, and everyone moved in that direction. Housing developers were well-positioned to add more new apartments in 2020 before the pandemic. But 80% of them belonged to the luxury class. The takers of this type of property are very small in number. Meanwhile, the other groups earning about 60% to 120% of area median income struggled to meet basic needs like housing because of high rent and short supply. They became the missing middle.
However, path-breaking solutions like converting hotels into affordable workforce housing can end their woes at a large scale, with everybody coming together to make it happen. Easy regulations, investor funding, the readiness of the hotel owners to explore this opportunity, and the trust of the middle-income class can prove massively helpful. People, who could not live close to job centers or struggled to access healthcare, education, and others, can now see an opportunity in everythinginforms Maxwell Drever. Of course, it is just the beginning.But ramping up rehabilitation efforts is the need of the hour.