In many European cities rising real estate prices put pressure on the yields of existing uses. Offices and apartments do not pay the required rent, exception are roof top apartments or other special locations.
There are several reasons for this. Many of the buildings are old and the structure and layouts do not fulfill today’s requirements. The buildings have a large portion of area with little or not sufficient daylight. Due to the city center location access for clients and employees is often difficult and inconvenient – parking is expensive, traffic congested.
Due to the high real estate prices a lease for these spaces is required, which pays in other locations for new and modern offices or apartments with much better infrastructure. The consequences are vacancies of 50% and more.
An alternative for owners and investors is the conversion into hotels. The trend to boutique hotels creates lots of opportunities. There is a perfect fit solution for almost every property. From luxury boutique to hostels – branded or unbranded there are many concepts around to find the best fit – economically and technically. The white label brands of the major hotel chains are an additional opportunity, because they offer flexibility regarding number of rooms, room layout, room size, design and size of F&B outlets and welcome experience.
The challenges of a conversion are usually room lay outs – you usually end up with a large number of different room types – and fire and life safety issues (FLS) The construction of additional fire escape staircases, the installation of sprinklers and the construction of fire sections require a creative and excellent design team. There has to be enough allowance in the project budget for FLS items.
On the other hand the old buildings offer a lot of design opportunities. High ceilings, great entrance can create additional value for rooms, lobbies and F&B outlets.
As an example I picked the hotel San Souci in Vienna, Austria. The location is a prime location. It is city center, the monuments are within walking distance and it is close to the subway. The building was half empty for several years. The reason was that is located in an area with heavy traffic and the floors up to third and forth floor were not attractive for apartments because of the traffic noise. The offices did not have modern infrastructure such as air condition and the layouts were not flexible due to the building structure.
The design took advantage of the characteristics of the building. The entrance, which used to be the access for carriages when it was built in 1872, was given a spectacular design and welcome experience.
The guest rooms have ceiling heights of more than 3 meters (9.8 feet). The areas with limited or no daylight were turned into bathrooms and back-of-houese areas.