Unlock New Potential—Can Multifamily Pop-Up Hotel Concepts Transform Lease-Ups?

The multifamily industry is great; it's like being among friends and extended family. We have these amazing, huge conferences like Apartmentalize, OPTECH, or the International Builders' Show. We get to catch up with each other, talk about what's happening in our businesses and the industry at large, check out the new players, and see what's new with the old players—but it's a lot to take in, and sometimes it can feel like information and sensory overload.

On the other hand, we have smaller, more intimate events like Industry Summits. While they certainly don’t come with all the pomp and circumstance of a national show, and you're not likely to see a big-name band headlining the closing party, these events are treasure troves of industry knowledge. Each handshake and chat brings fresh insights that can improve our individual professional journeys, help us become more effective in our roles, add value to our businesses, or even elevate our impact on the industry and our communities.

I recently had the opportunity to deliver the opening keynote at one such event: the Bisnow Southeast Multifamily Summit, hosted in Atlanta, which showcased several new and interesting perspectives

One panel discussion in particular left a lasting impression on me. It focused on the transformative impact of mixed-use buildings on the multifamily sector. Timothy G. Franzen from Placemakr took the stage and delivered a pitch about the untapped potential of short-term rentals within new apartment complexes.

Picture this—you're in the early lease-up stage of a beautiful new apartment building in a desirable area of the city. Out of the 300+ units, only 10% are occupied on day one. As most property managers who have gone through a lease-up will attest, this stage can be particularly stressful and challenging. Prospective renters are often drawn to the community energy in a building; they want to see people at the pool or using the common amenities. Because these buildings lack the vibrancy that defines a thriving multifamily community, the prospect might be turned off.

This is where companies like Placemakr come into play. They introduce a pop-up hotel concept, utilizing an allocation of unoccupied units. These units become the pop-up hotel "rooms," infusing life, activity, and vitality into the otherwise quiet, sleepy building. But if you dig deeper, you'll see the benefits are significant:

• There is the obvious benefit: It becomes easier for your onsite teams to sell to prospective residents. The positive energy and activity from a pop-up hotel enhance the appeal of the building, making it more enticing for potential tenants to see themselves in the community.
• There is the dollars-and-cents benefit: During a lease-up, speed to revenue is critical. Operators with new communities coming online have pro forma rents and occupancy rates they are targeting on a compressed timeline to achieve stabilization. The pop-up concept allows new properties to open an untapped revenue stream during this period, potentially easing financial pressures. For property owners and developers, this could function almost like a bridge revenue stream during a slower-than-desired lease-up.
• The marketing and awareness benefit: This unique approach can serve as a guerrilla marketing tool, creating buzz in the market and differentiating the property from competitors.
• There is the flexibility benefit: Given the short-term nature of a "hotel guest," the pop-up unit inventory can be right-sized quickly, catering first to traveler demand and later to unit availability.

Of course, there are considerations and potential challenges with the pop-up concept, including operational demands, regulatory issues (e.g. municipal short-term rental restrictions), wear and tear, and the need for specific insurance and management expertise. Success may depend on factors that vary from property to property including location, the amenities offered, the local market demand for short-term lodging, and the effectiveness of the property's management in balancing the needs and experiences of both short-term guests and long-term tenants.

I love seeing innovations like these emerge in our industry. We are fortunate to be living and working during a time when the convergence of new technology, new hardware, and perhaps most importantly, new thinking, is coming together to offer fresh and exciting ways of doing business in multifamily.

Do you believe that integrating pop-up hotels within new apartment buildings is a smart move? I'm curious to know your thoughts on this approach, or if you own or operate a property that has tried it, what your results were.

Let's spark a conversation!