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Business Observer Saturday, Sep. 24, 2022 2 months ago

Developer to convert Naples hotel to workforce housing

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The developer will take a 104-room hotel in Naples and turn it into apartments that are affordable for area workers.
by: Louis Llovio Commercial Real Estate Editor

A development company specializing in converting hotel properties into multifamily complexes has bought a Super 8 by Wyndham Hotel in Naples.

K2 Developers paid $9.6 million for the 104-room hotel on Tollgate Boulevard off of Collier Boulevard, near the on-ramp to Interstate 75.

The company, with offices in Coral Gables and Boulder, Colorado, did not respond to several requests for comments but has publicly acknowledged it was converting the hotel into much needed workforce housing in the area.

Although the company is not talking, its website details its approach to business and its mission. K2 says it looks for properties in areas with large resort communities in need of affordable housing for the “local workforce, who are struggling to find housing that is economical.”

The company swoops into those markets and buys properties to repurpose as “amenity rich, transit oriented, multifamily communities at a rental rate discount to market-rate housing.”

There is little doubt Naples is in need of affordable alternatives for workers.

Finding an affordable place to live in the city, or in most any municipality along the Gulf Coast, is getting increasingly difficult given the large pace of population growth. This growth, more than 800 people per day according to the state, has helped push rents up as demand far exceeds supply. And with interest rates climbing and slowing housing sales, some worry that rents, when compared to two years ago, will remain high for some time.

Naples renters are seeing the worst of this trend.

According to an August report titled 2022’s Most Expensive Areas to Rent, the Naples-Marco Island area saw rent jump by 28% last year, the most significant change in average overall rent prices in the country.

One solution some developers, like K2, have found is the repurposing of existing properties, particularly hotels.

In Pinellas Park, a Miami company named Eagle Property is developing an apartment complex out of two hotels in a high traffic area of Pinellas County, between St. Petersburg and Clearwater. The hotels were the 95-room TownePlace Suites by Marriott and the 88-room Residence Inn. The two properties are on 11.9 acres and when complete will have 183 studios, one- and two-bedroom apartments ranging in size from 500 square feet to 850 square feet. Rents will start at $1,250. That’s 42% below the city’s $2,171 median rent.

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