The Quiet Side of the Adaptive Reuse Boom
Office-to-apartment conversions get the headlines, but hotels and motels have quietly done much of the work. According to RentCafe, hotel conversions delivered more than 9,100 apartments in 2024, compared with about 5,900 from offices, in what was the strongest year on record for adaptive reuse. Hotels still make up about 18 percent of the units in the conversion pipeline heading into 2026, second only to offices at 47 percent.
The reason is simple. A motel is already most of the way to being housing. An office tower is not. If you want the office side of the story, our look at why developers are buying empty offices explains why those projects are so much harder.
Why a Motel Converts So Well
Every motel room already has the things that make office conversions expensive:
- A private bathroom with its own plumbing, often back to back with the next room's bathroom
- A window in every room, so there is no dark interior space to solve
- Its own entry door, often straight from an exterior walkway
- Its own heating and cooling unit, usually a through-wall unit that can be swapped for a heat pump
- Small, repeatable units that suit a standardized design and bulk purchasing
What a motel room lacks is a kitchen, a real closet, enough electrical capacity, and a code classification that allows people to live there permanently. Those gaps are where the money goes.
The Numbers That Got Everyone's Attention
California's Project Homekey made the model famous. The state bought hundreds of hotels and motels starting in 2020, and by early 2024 it reported more than 15,000 homes created through the program. Early analyses put the average cost near $130,000 to $148,000 per converted unit, compared with roughly $380,000 to $570,000 per unit for new affordable construction in the state. The speed mattered too: many units were occupied within months, not years.
Private operators work the same angle at the market-rate end. In Jacksonville, a developer converted a former Days Inn into Elevate at Baymeadows, about 107 apartments averaging roughly 300 square feet, aimed at single workers priced out of standard one-bedrooms. For a full breakdown of where the money goes, see our motel conversion cost guide.
Who These Apartments Are For
A converted motel is a small-unit building, and that shapes the market. The usual tenants are single workers, retirees on fixed incomes, students, traveling nurses, and people leaving shared housing who want their own door. Owners usually choose one of four models:
- Market-rate workforce studios priced below new construction
- Income-restricted affordable units funded with tax credits or local subsidies
- Supportive housing run with a nonprofit service partner
- Furnished mid-term rentals of one month or longer
Pick one early. It decides your financing, your rent assumptions, and sometimes which code path you follow.
Where Motel Conversions Break
The model is not foolproof, and the failures tend to come from the same few places:
- Room size. Many older motel rooms run about 250 to 330 square feet. The 2021 International Building Code allows efficiency units down to 190 square feet, but local rules vary, and a kitchen, a closet, and a bed all have to fit.
- Fire sprinklers. Most older motels have none, and the change to permanent housing almost always requires them.
- Electrical service. A room wired for a lamp, a TV, and a wall unit cannot run a cooktop, a fridge, and a heat pump.
- Zoning. Motels usually sit in highway commercial zones that may not allow apartments.
- Tired walkways and plumbing. Rusted stair connections and 1970s cast iron drains are common and costly.
The legal side is covered in our guide to motel conversion zoning and change of occupancy.
What to Look for in a Motel Worth Buying
The best candidates share a profile. Look for a one- or two-story exterior-corridor building of block or wood frame, with back-to-back bathrooms so a kitchen sink is a short plumbing run. Favor properties near transit, groceries, and jobs, because a studio with nothing walkable nearby rents slowly. A former lobby and manager's apartment are a bonus, since they become the leasing office and community room.
Walk away, or price it in, if you find failing walkway structure, widespread mold, or a drain system that needs full replacement. And order a Phase I environmental report: many roadside motels sit next to former gas stations.
Is It Worth It?
For the right building, yes. A motel conversion fills the biggest gap in most housing markets, a decent private apartment a single worker can afford, at a fraction of the cost and time of new construction. The deals that fail are almost always the ones underwritten by room count instead of by what the code and the market will actually allow. Count finished units, not keys, and price the sprinklers and electrical before you sign.
Related Reading
- What It Really Costs to Convert a Motel Into Apartments
- How to Design a 300-Square-Foot Studio That Works
- Motel vs. Office vs. Retail: Which Conversion Makes the Best Housing?
Ready to dig in? Follow the full motel to studio apartments guide, and rough out a budget with the cost calculator.