Aging Hotels Find a Second Life as Workforce Housing
A growing group of real estate investors are building a defined investment strategy around buying aging hotels and converting them into workforce housing. In a feature published by Hospitality Investor, writer Nellie Day examines how once-occasional adaptive reuse projects have evolved into a recognizable investment lane as older hospitality assets face rising renovation costs, refinancing pressure, and a persistent shortage of affordable housing.
The article profiles GoodHomes, a platform founded by siblings Leila (Feldman) Rosenberg and Adam Feldman that acquires underperforming hospitality properties and converts them into workforce housing. Rosenberg describes two trends colliding coming out of the pandemic: a wave of distressed independent hotels facing expiring franchise agreements, costly property improvement plans, and maturing debt, alongside intensifying demand for housing that middle-income households can afford. She cites roughly $48 billion in hotel CMBS loans coming due across 2025 and 2026, much of it refinanced at rates that have since climbed sharply.
Brian Connolly, founder and CEO of feasibility platform Feasibly, reinforces the role of capital markets pressure. He notes that average room rates are projected to grow by only 1 percent while inflation runs at 2.4 percent, making hotel conversions increasingly logical when a property struggles to attract guests. Connolly observes that housing offers steadier income and expects more capital to flow into conversion projects, adding that flexible investors will pursue struggling properties aggressively as new hotel supply outpaces demand.
The article also outlines how GoodHomes identifies viable conversion candidates, favoring assets with 100 rooms or more, efficient layouts, and locations near stable employment anchors such as hospitals, universities, manufacturing facilities, and military bases. Its GoodHomes Groton project in Connecticut, situated near the Naval Submarine Base and major employers, reached full occupancy within three months of launch.
