As Florida Housing Prices Surge, Developers and Residents Turn to This Unusual Alternative

Miami Beach.Photo byAntonio CuellaronUnsplash

The Super 8 Hotel in Naples was never one of the area's more luxurious establishments. Reviews (from when the property was still open to guests) mentioned mold in rooms, a mildewy odor, and poor service. Not exactly the ideal vacation getaway. But now, people are clamoring to get in.

Why? Because in 2022, a developer, K2 Developments, purchased the property with the intention of converting the 104-room property into reasonably-priced housing for local workers and community members. The move was welcomed among Naples workers. The economy of the area, where only 37% of the population is in the workforce, largely depends upon service employees staffing the upscale markets, shops, and restaurants that the area's largely-wealthy population frequents.

The income provided by those occupations, however, is not nearly enough for most workers to actually live in the area. With little-to-no affordable housing options available, it appears hotels may increasingly be the solution. When inquiries were made by the author for this article, the waiting times given ranged from 18 to 24 months, including for housing yet to be built.

While much housing is planned for the area, it is largely of the new and upscale variety like a 400-unit proposal from Lennar Homes that will run renters about $3,000 monthly. With so much development catering to the higher end of the market, developers like K2 see a gap in those markets that can be filled using older or less-favored hotels in resort towns and tourist areas.

Marco Island, Collier County, FL.Photo byChris DesortonUnsplash

This is far from the first incidence of hotels being utilized for employee housing amidst the pricing surge in apartments and homes. Last year, a TownePlace Suites and a Residence Inn in Clearwater were both converted into 184 housing units for employees in the area. Two others were converted over in Kissimmee, bringing 254 units to that area. Several more in the Orlando area also made the change.

While these developments provide welcome relief to those select few residents who manage to secure a unit, such projects do not approach anything near the demand that most of those respective cities have. In Collier County, for example, analysis has found that the region has a shortfall of roughly 10,000 units in the affordable-to-moderately priced category. The Super 8 conversion in that town would address 1.04% of that demand.

Housing costs across the entire state have surged since 2020, according to real estate giant Redfin. Rent prices in the Miami area, for example, rose from just median prices of $1,950 in 2020 to $3,111 in the most recent data. That 50% increase comes at a time when median household incomes in the state rose only 3.5% before adjusting for inflation.

Housing costs according to most experts, should not exceed one-third of your before-tax salary. The median income needed to afford the median apartment in Miami, using that metric, would be $111,996, which is more than double what the actual average household makes in the area.

Whether or not hotels can alleviate enough of this pressure to be noticeable remains to be seen. Recently, state legislators have proposed new measures that would outlaw rent or price controls of any kind statewide, so outside government intervention in the housing market is not likely. Instead, it is more likely that the underlying supply issues will need to be resolved before renters see any relief. Permitting and zoning issues can often complicate that process, however, particularly for multi-unit buildings.

For now, hotel conversions may continue to be part of that solution as local townships struggle to assist their residents. For more information and resources on affordable housing projects and developments in your area, residents can turn to the Florida Housing Finance Corporation.