Hotels converting to cost-effective housing to help meet growing need in Triangle

A Tennessee firm and a California group have partnered to turn three Extended Stay Americas hotel properties in North Carolina into cost-effective housing. The news comes as affordable housing remains an issue in the Triangle and across the country.

One hotel in Raleigh and two hotels in Durham – all under the Extended Stay Americas flag – are part of the deal. REALM, a Nashville-based investment group, is partnering on the project with Vivo Investment Group, an industry leader in hotel conversions.

The hotel chain is owned by Blackstone, which recently sold some of the hotels at auction.

That's where REALM and Vivo Living come in. They bought these hotels at auction and are converting them to affordable housing.

Will Moyer, principal with Realm, says rent for the three-to-four hundred square foot efficiency apartments will average around $1,000 a month.

"We see this as an opportunity to take what was otherwise a undervalued asset and serve what we believe is a macro need, which is sort of a low-cost provider of housing in these growth markets," Moyer said.

According to apartments.com, the average rent for a 547 square-foot studio apartment in Raleigh is $1,272 a month.

The apartments cost $75,000 per unit, a huge savings compared to the $250,000 it would cost to build from the ground up.

"It's kind of a streamlined system right?" Moyer said. "You're not having to do a major renovation or construction project."

One complex is on Wake Forest Road, across from Duke Raleigh Hospital. The other two are in Durham on NC Highway 55 and Ivy Creek Boulevard.

The units were purchased in December and are being renovated. Some of them will be ready for lease by the end of January.

Moyer sees the project as a win-win.

"A key aspect of what motivates us here at REALM is helping to solve societal problems while also providing some incredible risk adjusted returns for investors," Moyer said. "We believe real estate helps drive communities and try to find the highest and best use to help communities thrive."