Firm plans new hotel — and then housing
Owner of Residence Inn says it will convert old site into ‘affordable’ units after building new location
The owners of the 32-year-old Residence Inn by Marriott near Christus St. Vincent Regional Medical Center intend to replace the hotel with a new facility — either by St. Vincent or Presbyterian Santa Fe Medical Center on the city’s south side.
The new Residence Inn would be only the fourth new hotel built in Santa Fe in 20 years, other than the Drury Plaza Hotel, which opened in 2015 after an extensive remodel of the old St. Vincent Hospital site downtown; Hyatt Place, which opened on the south side in 2010; and the Hampton Inn under construction at 3430 Cerrillos Road.
Provo, Utah-based, PEG Companies plans to convert the existing Residence Inn into affordable housing apartments.
Converting older hotels into affordable housing has become a project for PEG in the past year. The development company has similar projects underway in other states and more than 10 conversions in the pipeline, said Jameson Haslam, a partner at the firm.
“You have an affordable housing crisis in the country right now,” Haslam said. “We have come up with this creative way to create really high-quality affordable housing.”
Haslam said the extended-stay Residence Inns built in the 1980s, which include refrigerators and stoves, have layouts “more conducive” to convert into apartments than the newer generation Residence Inns. He said there likely will be a mix of studios, one-bedroom and two-bedroom apartments.
The 120-room Residence Inn at 1698 Galisteo Road was built in 1987.
PEG acquired the Santa Fe property in September in an eight-hotel deal with Blackstone, a New York City alternative asset management firm described as “the largest real estate private equity firm in the world.”
The Santa Fe property was part of a Blackstone portfolio with seven Residence Inns and one Courtyard by Marriott in Sacramento, Calif.; St. Louis; Chicago; Tampa, Fla.; Mesa, Ariz.; and Charlotte, N.C.
All are under consideration for conversion into affordable housing, Haslam said.
“You can’t go into a city and build housing that is affordable without major government subsidies,” he said. “The per-door cost to build affordable housing is three times the cost of converting a hotel.”
Haslam said it’s too soon to know what the rental rates will be. The current hotel won’t be converted until the new Residence Inn opens, and Haslam said the “best-case scenario” for a construction start is one year from now.
Alexandra Ladd, the city’s housing special projects manager, is keeping an eye on this project. She said to ideally fall into the realm of “affordable” housing, an occupant should not spend more than 30 percent of income on rent and utilities, which in Santa Fe would be monthly rent in the $625 to $650 range.
Ladd said Santa Fe has a shortage of about 2,400 to 2,500 homes defined as affordable housing.
“In general, any time anything is converted into affordable housing, I’m going to be supportive of it,” Ladd said. “If the rents meet the affordable criteria and accept rental assistance vouchers, then this is an awesome project.”
PEG Companies, established in 2003, has developed hotels, offices, apartments and retail across Utah with a few in other Western states and one in New Mexico — a SpringHill Suites in Gallup that opened in 2016.
PEG is shopping for a site for the new Residence Inn, which will have at least 120 rooms.
“We have a couple sites we are looking at,” Haslam said. “The thing about the current property is its proximity to health care. The preference for us is to stay in the vicinity of a hospital.”
Haslam said sites near both St. Vincent and Presbyterian are under consideration.
“It can take a month, it can take a year,” Haslam said about getting ready for construction.
As the new Residence Inn will be a replacement, there will be little if any net gain in room count for Santa Fe.
“It’s always nice to have new facilities,” said Randy Randall, executive director at Tourism Santa Fe, the city’s tourism promotion agency. “Having a new Residence Inn is better than having an old Residence Inn.”