WhyHotel Looks for Sweet Spot Between Hotel, Apartment

ARLINGTON, Va. (AP) — Finding a place to stay in the Washington area during the presidential inauguration — or any other time — usually means crashing at a friend’s or relative’s place, finding a seemingly trustworthy homeowner willing to rent online or shelling out for a traditional hotel room.

A major developer wants to pioneer another way, which it is describing as a “luxury pop-up hotel”: Visitors can rent a furnished apartment for one night or several, combining the amenities of home and the benefits of a hotel staff.

The Bartlett, a 22-story apartment tower in Arlington’s Pentagon City, will start daily rentals for 50 units Jan. 13, just in time for the inauguration.

“It looks and feels like a home-share, but it’s run by professionals in a sizable new apartment block,” said Jason Fudin, director of strategic projects for Vornado Realty Trust, the developer that owns the building, as well as much of nearby Crystal City.

The idea of WhyHotel is to find a new way to generate money from existing spaces. Fudin described the effort as a pilot project for Vornado, to experiment with “how we can most efficiently use our capital investment” as the apartment building fills with traditional renters.

Others call it a paradigm shift, on par with the emergence of communal-living-focused buildings such as the Vornado-owned WeLive apartments in Crystal City, the micro-units at the old Patterson Mansion in the District’s Dupont Circle (and elsewhere) and the e-lofts in Alexandria, which offer flexible units that can be used for work, a residence or both.

The push for creativity comes from changes in real estate-focused industries. Home-sharing companies such as Airbnb have taken a big bite out of the hotel market, co-working spaces are causing many companies to reduce their office footprints, and people are beginning to talk about whether it is possible to repurpose vacant office buildings for public school classrooms.

Greg Leisch, senior managing director of market research for the real estate advisory firm Newmark Grubb Knight Frank in Washington, said that the apartment industry has been “very slow, way behind the hotel and office industry in participating in the sharing economy.”

“It’s a very ripe field,” he said, pointing to the more than 100,000 temporary workers — government, military and federal contractors — who come to the area for short stays and need more than a hotel but less than a year’s lease. The Vornado experiment includes a concierge and other amenities that typically are not available in corporate rentals.

There have been 39,000 new apartments placed on the market in the Washington region since 2014, and an additional 25,000 are being built, said Max Peker, a market analyst with CoStar, which studies the commercial real estate market. Apartment demand has been resilient because of strong job and population growth, but the rise in competing properties means landlords have limited opportunities to raise rents.

That is one reason that using apartments for short-term rentals could be seen as a welcome and lucrative option.

The Bartlett, Arlington County’s largest apartment building, is part of a bigger development called Metropolitan Park, which will add another residential building next year. It is adjacent to the Pentagon City shopping mall and another megaproject called PenPlace.

More than 500 of the Bartlett’s 699 apartments are already rented, Fudin said, with most of the WhyHotel spaces grouped together on two floors.

The rentals, which during the high-demand inauguration week range from $264 to $530 per night, will have the same full kitchen and laundry as other units in the building and access to the rooftop deck, outdoor swimming pool, gym and yoga studio.

The spaces will be advertised on Vornado’s online site and on others, such as VRBO, HomeAway and Airbnb, Fudin said.

Unlike private home-sharing units, recently approved by the Arlington County Board, the Bartlett is constructed to higher building code standards, which require sprinklers and wider hallways, for example. Vornado’s customers will also pay the county’s transient occupancy tax, as hotel users do.

Arlington’s planning commission and county board have agreed to allow the repurposing for two years, although Fudin said Vornado might not continue the experiment that long if demand for traditional rentals in the building continues.

Either way, he said, if the model proves successful, the company may try it elsewhere.

Erik Gutshall, the planning commission’s vice chair, said the hotel-style usage will benefit the county by generating tax revenue and enlivening the streetscape in Pentagon City.

“We need to keep innovating,” he said. “And we can’t get hung up on zoning laws built for the 1950s.”


Information from: The Washington Post, http://www.washingtonpost.com

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