By Jim Butler, Hotel Lawyer | Author of www.HotelLawBlog.com
7 September 2006
I've been reading some press items lately that suggest the condo hotel phenomenon is coming to an end. The stories point to a few specific markets, like South Florida and Las Vegas, that are saturated with capital and deals, or to specific projects that have gone awry.
Are condo hotels dead? No, they are alive and well. Will the super-heated boom continue? No. Consumer demand will normalize and be cyclical, but quality projects will continue to be successful, particularly in markets that have not been flooded with product.
In any event, we believe that condo hotels continue to perform a valuable role and have earned an enduring legacy in the hospitality industry. They make new hotel development feasible where limited financing and skyrocketing constructions costs would otherwise be prohibitive. And perhaps more importantly--at least over the long-term--condo hotels have changed the way we view hotels being mixed with residential other kinds of real estate projects.
From direct experience with more than 80 hotel mixed-use projects over the past five years, all of which involved a condo hotel or residential component, often with other commercial real estate uses as well, we have participated in a intense effort that has produced some break-through solutions to obstacles that held back many earlier mixed-use projects. This effort has created a new technology and a deep pool of practical experience that already paying huge dividends. This technology and experience is critical to the success of hotel mixed-use as it takes an ever more-prominent role in commercial real estate.