Converting low-end hotels into attainable long-term housing - Two Nashville developers take a slightly different approach
BY NICOLLE S. PRAINO
OCT 26, 2023
AGB Real Estate’s First Motel Conversion in Nashville, TN
The properties they reinvent might not always be so pretty, but some Nashville developers are looking at ways to solve a problem while making a profit.
Ryan Hooper is a partner at Nashville’s Creative Development Partners and is affiliated with the purchase of both the Save-A-Lot building on Clarksville Pike and an airport-area former hotel. The group is keeping the Save-A-Lot with new ownership of the business. The former Red Lion Inn & Suites on Atrium Way will be converted to apartments for rent at about $1,000 per month.
“We’ve heard of other developments across the country where they’re doing something like this — where they’re revitalizing an existing asset to add more value to the community than what it is currently existing as,” Hooper says. “So, when this got brought to us off- market, [we] did quite a bit of research and saw that the capital wasn’t going to be as intensive as a ground-up multi-family development.” He says the reason he liked the idea is because of his own experience: When he first moved to Nashville, Hooper says he could not afford the higher-end apartment complexes.
Another local developer saw the same problem. “We looked around what was going on during the pandemic and the increase in the cost of living, especially here in Nashville,” Adam Rosenberg, founder of Nashville’s AGB Real Estate, says. “I think there are some populations of people who are getting behind, who are having to move further and further out of the city limits to be able to afford a comfortable, great place to live.”
Rosenberg’s group converted a Hermitage budget hotel to an apartment building over the last year and has now acquired another property. In August, he and partners closed on the Americas Best Value Inn Nashville, which like Hooper’s hotel conversion project is located near the airport but is farther south near Harding Place and Interstate 24. Rosenberg’s group reopened their retrofitted Hermitage property, where the average rent is about $1,150, within 10 months.
“The reason we did this model [is] we had seen it elsewhere and we thought we could execute it extremely well here, and efficiently,” he says. “[Hermitage was a] very quick turnaround for any development, and the more you can do that the more you can begin to address the challenges of attainably priced housing that Nashville and a lot of other growing metro markets are experiencing today.”
Both men say these conversions work not just because they are good for the community but because they make business sense. “From a business standpoint, it’s not as capital intensive [as ground-up work] and it’s something that there’s already value there in the structure,” Hooper says. “There’s risks on both types of projects, but you know we have a lot of value already in the property we’re buying, and it’s not as risky as tearing something down [and] doing all the horizontal work.”
Adds Rosenberg: “Of course, I have a fiduciary responsibility to my investors and as a real estate developer myself, we want to obtain a profit from that. Could I do another hotel? Absolutely. But the opportunity to really drive developments that matter was something that hit home for me.”
Hooper, too, likes the community benefits of these types of projects. “You have a purpose when you are providing that compared to building a new construction modern home, which we’ve done in the past, but it’s much more rewarding,” Hooper says. “Me and my two business partners have always had this drive and want to help different communities and people and demographics, so it just kind of fell into place and it made sense for us.”
Rosenberg got his start in real estate doing the opposite kind of work: He converted a 1950s apartment building in Panama City, Panama, into a “flashy boutique hotel.” “But what I really want to do for my career and for my development is provide housing that people can be proud of and want to come back to at night and something that is within reach or attainable to them,” he says.
Hooper and his group are looking at other potential business models in addition to real estate to continue revitalizing community properties while Rosenberg says renovating these hotel properties is the blueprint that works for his team.
“For me as a developer, it’s a model that is repeatable, and we know that there will be a tenant and a user for us that will be excited about the change that we’re bringing,” he says. “The Metro councilmembers that we do this work with are excited to talk to us and work collaboratively and work alongside us. ... For us to come in and completely renovate a piece of property that was a blight on the community and bring in hardworking honest people