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Hotel, motel conversion into apartments becoming popular in Colorado Springs

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Posted at 6:36 PM, Jul 14, 2021
and last updated 2021-07-21 12:00:44-04

COLORADO SPRINGS — A new trend may help Colorado's affordable housing crisis, and it involves converting hotels and motels into apartments.

"I think it is a great idea. We have a lot of hotels, motels, and a lot of new ones coming online. So some of the old ones, this could be a great new purpose for them because we are really desperate for housing," said Richard Skorman, Colorado Springs City Council.

As Colorado Springs continues to grow, the city's affordable housing crisis is getting worse.

"Our rents are sky high, and our housing prices. A lot of people who work in the city can't afford to live here," said Skorman.

That's why developers are getting creative by converting buildings like The Hotel Elegante and Motel 6 on Voyager Pkwy into apartments.

"We've heard about some other ones but I'm not going to say their names because I'm not sure if they are going to happen. There are some, especially in the downtown area, that people are talking about," said Skorman.

He says there are a number of conversions in the works and some that have already been completed.

"I think there's going to be many more coming online, and the other one that is kinda out there is office buildings. There are a lot of office buildings that don't have workers coming back. Many people are happy working from home and owners of the office realize it is an expense they don't have to have so there could be apartments in office buildings," said Skorman.

"I've had conversations with a number of development teams and investors who are interested in purchasing these properties and turning them into housing. That's everything from smaller hotels as well. Anywhere from thirty to forty units, all the way up to 600 units," said Steve Posey, Community Development, City of Colorado Springs.

Posey says there are a number of benefits from converting hotels and motels, but the big one is the cost.

"The cost of new development here in Colorado Springs and in our region has been going up very quickly. It was not that long ago that it was $250,000 a door for a new apartment building, and we are up to $300,000 a door these days. If these hotel and motel conversions can come in at a good price and a good per door then that's definitely going to be a plus," said Posey.

Since they are usually in urban areas, Posey says it could also help provide transportation and employment services.

"Other type of public amenities, trail systems that are not too far from that area, and schools," said Posey.

"There are two types of problems that we are solving. One is that you have hotels and motels that have been left and no longer being used, and then you have people who are homeless who need housing. We are solving both of these issues at once when we convert these old properties into housing for the homeless," said Brett McPherson, Colorado Department of Local Affairs.

With federal and state funds expected soon, McPherson says it can help with conversions and building more housing.

"The state legislature passed HB-242 which is going to use state stimulus funding of up to $30 million for converting underutilized properties like hotels and motels that have been vacated. In addition to that, the American Rescue Plan Act has provided another $24.7 million that can be used to converting underutilized properties. So in total, there is going to be over $50 million coming into the state of Colorado to convert blighted properties that can help house our houseless neighbors," said McPherson.

"We have a long way to go, we have a lot of money to decide how to spend for the best for the best use of that money," said Skorman.