A California-based real estate investment firm aims to transform two motels on Market Street in Wilmington into efficiency apartments.
Vivo Investment Group, a company that specializes in such conversions, proposes to turn the Budgetel Inn and Motel 6, both at 4903 Market St., into a multifamily complex with 230 units.
Capitalizing on a real estate trend that's expected to grow, Vivo started its first conversion in 2019, a project to change a historical hotel in Ogden, Utah, into apartments, said Brett Tanimoto, chief investment officer for Vivo Investment Group, in an email.
Explaining the motel conversion trend further, Tanimoto said, “There has been a continuing crisis in the U.S. where housing and rent prices are just not affordable due to a rapidly growing population and limited supply. This is impacting most Americans as millions struggle to afford living on their own and millions more are spending 50% of their income on housing, oftentimes driving them into debt.”
At the same time, Tanimoto said, new hotel developments have left older, mostly vacant hotels and motels “functionally obsolete.”
He added, “While both conditions existed prior to the COVID-19 pandemic, it has exacerbated the situation. By converting these struggling hotels into residential apartments, Vivo can cost-effectively and sustainably deliver a new supply of higher demand apartments to the people who need it most.”
That need is evident in the Port City, he said.
“Over the last 10 years, Wilmington has experienced a large growth in population and increased demand for housing, but due to the lack of available land, and high construction costs, housing costs are out of control,” Tanimoto said. “Our mission is to solve America's housing crisis, and converting low demand hotels and motels into workforce housing is one way to achieve our goal.”
The 7.7-acre Budgetel Inn and Motel 6 property is currently under contract with Vivo, said Nicholas Silivanch, of Eastern Carolinas Commercial Real Estate, on Thursday.
“As part of the sale, the property will seek a rezoning [from the city of Wilmington] to allow for a multifamily use, changing the property’s current zoning from regional business to multifamily,” Silivanch stated in an email. “This rezoning will create efficiency apartments that are targeted to Wilmington’s workforce, and located in a part of Wilmington that is central to downtown, area beaches and employment nodes.”
Silivanch and fellow commercial real estate broker John Hinnant of ECCRE have been marketing the property for the current owner, Hotel Plus LLC. Silivanch said the Vivo proposal varies from some of the area’s recent apartment construction trends.
“Most of the new complexes developed or in the works are luxury apartment communities, which are being built on vacant land,” Silivanch said. “This renovation of an existing facility, through an adaptive change of use, will have all of the modern apartment community amenities that are desired but at workforce rental/affordable rental rates.
“This redevelopment does not add any new impervious areas or remove trees. Instead, by taking what is already there and reusing it, it delivers much-needed housing, with minimal new environmental impacts," he added.
Explaining the rental rates that the Vivo Wilmington apartments would have, Tanimoto said, “We are creating market-rate apartments and do not rely on any government subsidies. Vivo Apartments are priced 10-20% lower than the average apartment in a given market. We offer fully renovated units with new flooring, kitchens and bathrooms and amenities found in Class A apartments like a pool, tenant amenity lounges, gyms, dog parks and outdoor barbecue areas.”
Vivo has developments throughout the U.S., including one in North Carolina in Winston-Salem, which Tanimoto described as “a huge success.”
He said, “We purchased the property in September 2020, and we are approximately 90% leased in less than 12 months.”