Multifamily housing is an obvious adaptive reuse for vacant hotels and motels. But what goes into converting commercial properties into housing inventory?

NAR offers insights and best practices in Case Studies on Repurposing Hotels/Motels into Multifamily Housing. The May report includes survey results from commercial members who worked on these projects from 2018 to 2020 as well as five case studies that describe the conversion process.

A lack of supply has caused rental housing to become increasingly unaffordable, especially to low-income households, the report says. In Texas, gross rent is 38% of the median household income among low-income renters.

Of the survey respondents’ projects, 60% were multifamily housing, workforce housing, housing for veterans, or housing for health care workers. Senior housing and assisted living made up another 11%.

Seventy percent of the finished projects offered either market-rate housing (35%) or a mix of market-rate and affordable housing (35%). Thirty percent only offered below market-rate prices.

The majority of affordable housing in the U.S. takes advantage of low-income housing tax credits and other federal tax incentive programs, the report says. However, lodging can be converted without using those credits. Developers can pursue private funding or equity financing. Commercial lenders, tax abatement, and public-private partnerships are also options.

Fifty-five percent of survey respondents’ projects required rezoning. Zoning regulations determine where affordable housing can be constructed, the report continues. Meeting zoning requirements for a new intended use can be daunting and expensive. They also may need to obtain a zoning variance.

To read the report, visit