Along Wilmington’s bustling Market Street corridor, two commercial real estate brokers are eyeing change.
John Hinnant, vice president of Eastern Carolinas Commercial Real Estate, and Nick Silivanch, a partner with the firm, helped broker a deal to upfit Market Street’s former Budgetel Inn and Motel 6 into 230 apartments. The complex opened to renters last year.
Then, less than a half mile to the east, Hinnant and Silivanch helped broker another hotel-to-apartment conversion. This time, developers converted the former Days Inn into 120 apartments.
The adaptive reuse of both hotel properties illustrates what Hinnant and Silivanch see as a broader trend along stretches of Market Street: a shift away from a retail-heavy corridor to one with a climbing number of apartments and residents.
Their work marketing to developers with an eye toward adaptive reuse dates back to 2021 when the two helped broker the sale of the former AmeriVu Inn & Suites at 2828 Market St.
According to property records, Suites on Market LLC purchased the 113-room motel, which sustained substantial damage from Hurricane Florence, in January 2021 for $2 million. The motel’s rooms have since been refurbished and converted into long-term rentals.
After that, the brokers started marketing hotel properties along the corridor to developers specializing in adaptive reuse.
“It’s wildly popular in other parts of the country,” Hinnant said about the hotel-to-apartment conversion trend, “and we’re starting to see the move come East.”
Some hotels along Market Street have a seedy history.
In 2016, the city of Wilmington took legal action against six hotel properties in the corridor, labeling them nuisances following repeated incidents of controlled substance use along with loitering and prostitution.
Wilmington filed a lawsuit in July 2016 against the owners of the targeted hotels, asking for a restraining order that would prevent the hotels from operating.
The hotel owners ultimately agreed with city leaders to halt the restraining order. In exchange, they said they would require all guests to present a photo ID and a credit card when checking in, keep a hotel registry, issue parking permits to guests, employ an overnight security guard and install more security cameras, among other measures.
Hearing about the legal issues was, in part, what initially piqued Silivanch’s interest in trying to draw redevelopment to pockets of the corridor, he said.
Hinnant and Silivanch (
shown below) started by contacting owners of Market Street hotels to see whether they were interested in selling their properties. He hoped they could “cookie cutter” the type of conversion that took place at the former AmeriVu Inn, Silivanch said.
They found success with two adjacent hotels – a former Budgetel Inn and Motel 6.
Located at 4903 Market St., the two operated out of a shared lobby and had an on-site restaurant. The buildings were built in 1965, according to New Hanover County property records, and housed several hotel chains over the years.
California-based Vivo Investment Group purchased the properties for $11 million in late 2021. The company specializes in “purchasing older, underutilized hotels and converting them into affordably priced apartments with hotel-type amenities,” according to Leslie Moody, of Vivo Living.
When identifying prospective properties, the company looks for 120 to 600 units in areas that are walkable or near transit corridors. It also looks for sites that are already zoned for residential units.
When Vivo officials started looking at the site, that zoning wasn’t in place for the Wilmington property. In the fall of 2021, Vivo secured a rezoning from Wilmington leaders with the condition that at least 10% of the new apartments be reserved for affordable housing.
“All we did was take it through a zoning process. Yesterday, it was a hotel, we turned the lights off,” Silivanch said. “This morning, after the council meeting, we turned the lights on – it’s an apartment complex for zoning (purposes).”
The following year, Vivo started renovating the property (
shown below). They added kitchens to each unit, changed the former restaurant into a game room and completed deferred maintenance on the property.
The complex began leasing to tenants in early 2023. The floorplans of Vivo’s studio units are small, with floorplans ranging from 223 to 311 square feet, according to online listings. Monthly rental rates range from around $800 to just over $1,000.
Around the time Vivo was upfitting its property, Hinnant and Silivanch set their sights on brokering another adaptive reuse at a property just down the road.
According to Hinnant, the former Days Inn at 5040 Market St. suffered significant damage during Hurricane Florence, which caused mold to spread throughout the 120-room hotel.
Preston Dellinger, the firm’s chief operating officer and managing principal, said in February that the brokers approached Servio Capital Investments Inc., a Louisiana-based real estate investment firm, about 18 months ago with the Days Inn property.
The company has some history with adaptive reuse, having converted a 275-key hotel in Lafayette, Louisiana, into 217 apartments, Dellinger said.
The company acquired the Market Street property last April and has since worked to renovate the complex, taking the building down to the studs; installing new drywall, cabinetry and fixtures; and painting the walls.
“Everything is brand new inside,” Dellinger said.
Construction is ongoing at the former hotel’s two main buildings. Dellinger said in February his firm hoped to wrap up work on both buildings by the end of March. The firm is also securing a user for a former restaurant building along Market Street. They hope to bring in another restaurant, he said. According to Dellinger, Servio Capital evaluates properties for potential adaptive reuse based on three factors: whether it’s in a market with a growing population, the location of the property within that market and whether the project makes financial sense.
“You mix those three together, and that’s what drives your decision,” he said.
Hotels are ideal for adaptive reuse because they have an existing footprint with infrastructure like plumbing and electrical wiring. That helps make the cost of adaptive reuse substantially lower than building from the ground up, Dellinger said.
As an asset class, the hotel market remains strong, which Dellinger said has made it more expensive to acquire hotel properties for a conversion to apartments. Instead, some firms that want to convert existing commercial space into residential units are turning to offices – a sector that’s been “taking a beating” since the COVID-19 pandemic, Dellinger said.
“That’s being looked at pretty hard by development companies like ours to take office and turn those into apartments, but they’re a lot harder to do than hotels,” he said. “Hotels are already sectioned off, and if you want to create combined units, it’s much easier to do so. A lot of them have already connecting doors.”
Hinnant and Silivanch envision bringing the adaptive reuse model to other motels in the Market Street corridor. They’re in talks with the owners of some other hotels and see a handful of other parcels on Market Street as prime spots for redevelopment.
Hinnant points to the building that housed Wilmington’s AMC movie theater for years near the intersection of Market Street and Kerr Avenue until its doors closed last fall. He also sees potential in vacant space in several Market Street strip malls and some undeveloped land in the corridor.
“We’ve got very little land left in New Hanover County, so we’ve got to look at these older corridors. Market Street, historically, was the major corridor to get into Wilmington before the Cape Fear Memorial Bridge and the (Isabel) Holmes Bridge,” Hinnant said.
“These older corridors with one- and two-story buildings are going to be eventually redeveloped into more of an urban context so that we can get more density,” he added. “That’s just going to have to be what happens if our community continues to grow. We’re going to have to adaptively reuse property.”
