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Commercial Real Estate
Business Observer Friday, Aug. 12, 2022 1 month ago

Developer addresses Pinellas housing demand by buying two hotels — and a lake

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A Miami developer purchased two Pinellas Park hotels and is turning them into nearly 200 apartments with the city's help.
by: Louis Llovio Commercial Real Estate Editor

Months after buying two Pinellas Park hotels and announcing the properties would be transformed into apartments, a Miami developer has opened the first phase of the project, bringing new units to an area in need of affordable and attainable housing.

The complex that’s evolved out of two hotels in a high traffic area of Pinellas County, between St. Petersburg and Clearwater, is called the Pelican Lake Apartment Homes.

“We’re in the business of buying multifamily apartment complexes and doing what is called value add to improve the conditions in the community by improving the exterior and also the interior,” says Humberto Cubillos, senior vice president of asset management for Vidalta Property Management, an affiliate of the developer, Eagle Property Capital.

“But we saw an opportunity when the pandemic started, with some hotels closing and other struggling financially, to acquire assets in great locations and good quality construction. So, we decided to put these hotels under contract.”

Eagle Property has a portfolio of more than 6,600 apartment units, mostly in Texas and Florida, including 840 units in Tampa Bay. To date, the Pinellas Park hotels are the only ones being transformed.

The hotels were the 95-room TownePlace Suites by Marriott at 13200 49th St. N. and the 88-room Residence Inn at 5050 Ulmerton Road.  According to Pinellas County property records, Eagle paid $10 million for the TownPlace property and $10.5 million for the Residence Inn.

The two properties, connected at the rear of one and on north end of the other, are on 11.9 acres and have a total of 14 three-story buildings and 209 parking spots. When complete, there will be 183 studios, one- and two-bedroom apartments ranging in size from 500 square feet to 850 square feet. Rents will start at $1,250.

Cubillo says 4,000 square feet of space will be reserved for a small grocery store.

 

The project

The first phase of the project opened in late July, with the first residents moving into refurbished units in the two buildings that once made up the TownPlace hotel. The Residence Inn portion of the project should be done later this year.

The properties were a good choice for the kind of project Eagle was looking to undertake because many of the rooms already had kitchens in them and other amenities that could be used in the transformation, says Cubillos.

TownePlace Suites by Marriott one-bedroom after.

Walking into the apartments, one can see by the configuration that the unit was once a hotel. But that sense is quickly dispelled because of the new updated flooring, brighter color schemes and dozens of other touches that personalize a small apartment.

In an interesting twist, Eagle left several units in each of the two buildings untouched so it could offer furnished apartments for rent. Cubillos says about 50% of units rented as of July 27 were those furnished units. Management on site says the biggest interest in those particular apartments is coming from college students.

“There’s not only a demand (because of) a shortage of housing, but people are interested in furnished, which, for us, is a new discovery,” he says.

 

The need

Pinellas Park, like many cities across the region, is in need of either creating or preserving workforce housing as rents continue to rise.

The city of 53,000, according to the most recent U.S. Census data, sits between Clearwater and St. Petersburg in the working-class heart of Pinellas County.

Nick Colonna, the city’s Community Development Administrator, says prices in Pinellas Park have not gone too high especially in comparison to its neighbors.

But he’s not sure how long that can last given the city’s location — there’s easy access to the beaches, Tampa International and St. Pete-Clearwater International Airports and job centers in downtown St. Petersburg, Tampa and throughout the county. This, he says, means there are younger people and businesses discovering and moving to Pinellas Park. “What that naturally does, it’s a double-edged sword, it gives you a better tax base but it drives up the cost.”

“The cost of housing going up just $50,000 or $100,000 can make or break someone. It’s better than other parts of the county, and it’s great for job attraction, but it’s something that we are cognizant of, that City Council is cognizant of. We are working toward developing workforce housing.”

Focusing on making sure housing is attainable is especially important because all the attention usually falls on splashy luxury projects and low-income housing, he says, “but the everyday person here, you know, needs that assistance as well.”

 

The solution

From Cubillos’ perspective, one of the toughest parts of transforming the two hotels was getting zoning approvals because of density issues. He says when the company bought the properties zoning rules only allowed 40 units per acre for hotel. When the property was converted to multifamily, that was reduced to 20 unit.

So the first big challenge Eagle faced was that there wasn’t enough acreage to convert all 183 units. The company would have “to destroy almost half of the project.”

The solution, it turned out, was right in front of them. Literally.

The two hotels sit along a lake that borders an office park on the other side. Eagle bought the lake. 

The lake itself is about six acres. The company changed the zoning for the lake as well as the zoning on the two hotels and integrated everything into a single project.

With that in place “we didn’t need to demolish any units,” says Cubillos. “We’re converting 100% of all the existing units.”

Getting to that point wasn’t so easy. Colonna says the lake and one of the properties was zoned commercial and the other was zoned for office and research and development. In order to make the project work, the city had to combine the three and zone it as a single property.

But Pinellas Park wanted some guarantees before it would approve the project.

The thinking was, Colonna says, “if we’re going to put all these things together, let’s tighten up some promises.”

“It’s easy to say, ‘this is the one, and we’re going to do apartments, and we’re going to can try to hit the workforce group. Well, what did these (future residents) need on site?”

Interestingly, a similar proposal for the two hotels was considered in 2018 but failed to get zoning approval.

This time, though, the city and Eagle were able to work together to come up with a plan worked.

What the county did is make this a planned unit development, which takes the basic zoning and puts an overlay of design and uses on it. That included restricting the project to target workforce houses and making sure there are amenities to serve the community, including a grocery store, since the nearest one is a couple of miles away.

The plan also calls for a cleanup of the lake and keep it open to the public.

To that end, Eagle has agreed to build an outdoor gym for the public around the perimeter of the lake, as well as a dog park and barbecue area.

“It, obviously, is a strong partnership between the city and private enterprise,” says Cubillos.

One that he and city officials hope will pay dividends for those struggling to find housing.

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