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Houston19514

Humble Tower Apartments to Springhill Suites Hotel

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The old Humble Oil Building has been sold and they are going to convert the apartment portion into a new Springhill Suites Hotel.  The building will, as of 2015, have Courtyard, Residence Inn, and Springhill Suites hotels.

 

Marriott seems to have fallen in love with downtown Houston.  By 2016 we will have the following Mariott flags:

 

Courtyard

Residence Inn

Springhill Suites

JW Marriott

Autograph Collection and

Marriott Marquis

 

http://www.bizjournals.com/houston/blog/breaking-ground/2013/03/maryland-company-to-convert-historic.html

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I really like those apartments and when I moved back to Houston I tried to get one but there was a wait list.

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I have lived in Humble Tower on and off for over 8 years :( sad day. The managers didn't even know about this. Everyone knew they were being sold, but didn't know that this is what they were going to do. I still don't see why. This place is 100% occupied all the time and there are wait lists to get into the building.

I think they are not leasing after 2013.

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This sucks...kind of hard to bring new residents to downtown when there are no apartments/lofts for them to live.

 

GL Daniel - let us know what they do with the remainder of your lease

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Net loss.

 

Humble Tower apartments are great. 100% leased virtually all the time.

 

These new owners must know more than me, but I'd be surprised if a Spring Hill Suites could bring in more revenue than a 100% leased luxury apartment building.

 

Would somebody please start turning the old Texas Co. complex into apartments already!

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Net loss.

 

Humble Tower apartments are great. 100% leased virtually all the time.

 

These new owners must know more than me, but I'd be surprised if a Spring Hill Suites could bring in more revenue than a 100% leased luxury apartment building.

 

Would somebody please start turning the old Texas Co. complex into apartments already!

 

It makes sense to me.  They are taking an 82 unit apartment complex and converting it to a 166 unit hotel so I think that there is significant revenue gain in that.  It's walking distance to most of the major companies in downtown, it's located across the street from Pavilions, and it's directly on the light rail, so that strikes me as a pretty good location for a mid-range business hotel.

 

Also, as they reference in the article, there should be significant economies of scale because they can consolidate operations for all three brands in the building.  Not so close to the convention center, but I'm guessing that they probably run shuttles to the Convention Center already, so there won't be incremental cost there.

 

I know that there are a lot of people disappointed by the loss of residential, but I do think that there's a lot of upside to increasing the number of hotel rooms in downtown.

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I know that there are a lot of people disappointed by the loss of residential, but I do think that there's a lot of upside to increasing the number of hotel rooms in downtown.

 

Because Downtown needs less residents living in the area....who knows, soon we all may be living in Cinco

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166 hotel rooms does sound better than 82 apartment units.

 

However, when was the last time any market had 100% hotel occupancy rates? Houston's current rate is just 63.7%. That's 106 rooms a night, not 166.

 

Doing the (projected) math, here's what we can "know."

 

82 apartments/100% leased/$2,500 a month average = $205,000 a month

 

106 rooms a night/30 days a month/$130 a night = $413,400 a month

 

So, you've doubled monthly revenue. That's good.

 

But, then come the added expenses. First, there's the build out costs. Those are going to be huge. Everything from reconfiguring the space to buying furniture, linens, towels, etc... Then there's the monthly costs with higher insurance policies, a TON more staff (managers, desk clerks, house keepers, marketers, etc...), increased utility rates, etc...

 

Lastly, the hotel market in Houston is a lot more volatile than the current apartment market. 

 

There could be a higher upside, but there's also a lot more risks. Additionally, the Houston downtown market is getting ready to add a Marriott Marquis, a JW Marriott, and a rumored Hilton Garden Inn. That's a lot more competition for the $$$.

 

At the end of the day, I am a conservative investor. I wouldn't bite on this one.

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In general which generates more revenue, apts or hotels? I know there are a lot more variables, but...

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I believe that the occupancy rate you have used though is the occupancy rate you is the rate for the city, not the rate for downtown, which has the highest occupancy in the city. There are a couple of other numbers that I would question, but I don't know where you got your numbers from and I certainly don't know what the right answers are.

I would suggest though that since Marriott has two brands in the building already then they should be able to project revenue and cost with a pretty high degree of accuracy. With that kind of data available, I would be really surprised if there's a high element of risk here.

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Not that this matters, but the Marriott just lost a huge deal with NRG next door. NRG pays for a certain number of rooms to be blocked off just for their out of town business people. They had so many complaints regarding the bums and the bus stop people at the corner (They trash that corner everyday, and the building no longer cleans it, because they said that the city should clean it) of Dallas and Main. NRG now is using the Hilton America's even though it is 5+ blocks away.

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Could the Marriott have done anything about that? Doesn't seem like it

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The historic Humble Oil Building complex on Main Street and Dallas in downtown Houston that has been home to two Marriott concepts since 2003 — a 191-room Courtyard and a 171-room Residence Inn — is slated to add a third.

RLJ Lodging Trust, a Maryland-based company, purchased the complex for $79.5 million last week, and has plans "to convert the property's apartment component into a 166-room SpringHill Suites hotel."

That apartment component currently consists of 82 units that, according to real estate listings, "range from 519 square foot studios to the two grand 2,000-plus square foot penthouses." RLJ said that conversion from apartment to hotel would be complete "by the middle of 2015."

The news comes at a time when the Houston Downtown Management District is pushing for more hotels near the George R. Brown Convention Center and incentivizing construction of downtown residential properties.

http://houston.culturemap.com/newsdetail/03-26-13-another-new-hotel-for-downtown-795-million-buy-to-clear-historic-building-for-guests/?utm_source=sf_twitter

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So it sounds to me that they are trying to increase the downtown hotel occupancy rate at the expense of the residential rate. May appear to be good for the investor's sake, but like Kinkaid pointed out, there's a whole lot more variables involved.

 

The monthly expenses of increased need of employees combined with the increased hotel competition does seem to cut into the profit margin quite a bit. It doesn't seem worth it.

 

so where is that going to leave our downtown population? About at least 1,000 people less from the 4500 that was there before, including the inmates? That's going to make downtown even more less marketable place to live.

 

I don't see the benefit in this.

Edited by scarface

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I don't get it, why change it to a hotel when it's got a permanent waitlist for residential? Did they think of raising prices?

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So it sounds to me that they are trying to increase the downtown hotel occupancy rate at the expense of the residential rate. May appear to be good for the investor's sake, but like Kinkaid pointed out, there's a whole lot more variables involved.

 

The monthly expenses of increased need of employees combined with the increased hotel competition does seem to cut into the profit margin quite a bit. It doesn't seem worth it.

 

so where is that going to leave our downtown population? About at least 1,000 people less from the 4500 that was there before, including the inmates? That's going to make downtown even more less marketable place to live.

 

I don't see the benefit in this.

 

You think 1,000 people live in those 82 apartments?  In reality, probably fewer than 100 people reside there.  I am sure the new owners have crunched the numbers thoroughly and they have better numbers available to crunch than anyone on this board.  Clearly, they see a benefit and that's all that really matters. 

 

Yes, slightly disappointing to lose downtown residences but there are hundreds of new ones coming on the scene soon.  At the same time, the loss of the residential space is offset by the plus of additional hotel space.

 

It's amazing how this board turns every bit of news into bad news for Houston.

 

(FWIW, the current downtown population, including prisoners is approximately 14,000.)

Edited by Houston19514

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On an average day, would a resident or visitor spend more money and spend time going out to eat, enjoying entertainment etc?

This may make downtown look busier and bring more retail and restaurants.

Overall, it could be a win and actually attract more residents.

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On an average day, would a resident or visitor spend more money and spend time going out to eat, enjoying entertainment etc?

This may make downtown look busier and bring more retail and restaurants.

Overall, it could be a win and actually attract more residents.

 

... especially when combined with the development of substantial new residential space.

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On an average day, would a resident or visitor spend more money and spend time going out to eat, enjoying entertainment etc?

This may make downtown look busier and bring more retail and restaurants.

Overall, it could be a win and actually attract more residents.

 

Will the hotel maintain the same 100% occupancy that the residential maintains? Dubious.

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Will the hotel maintain the same 100% occupancy that the residential maintains? Dubious.

What is the usual hotel occupancy rate of downtown hotels?

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Will the hotel maintain the same 100% occupancy that the residential maintains? Dubious.

 

Who cares?  More to the point, why should anyone care?

 

But even if the hotel only maintains 50% occupancy, it will have approximately as many people "residing" there on an average day as currently reside in the 100% occupied apartments.

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Who cares?  More to the point, why should anyone care?

 

Because lockmat was drawing a comparison between the spending habits of a hotel visitor vs. a resident.

Edited by kylejack

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Because lockmat was drawing a comparison between the spending habits of a hotel visitor vs. a resident.

 

Okay, but see my further response.  There will most likely be more people "residing" in the hotel than currently reside in the apartments, even if the hotel has a relatively low occupancy rate.

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If this hotel was going to be a high end hotel, then I might think the visitors would spend more downtown than Humble Tower Apartment residents. 

 

However, this is a mid-range hotel aimed at business travelers who will likely be on expense accounts. I doubt folks staying at Spring Hill Suites on a Wednesday night will be checking out shows at the Hobby, dining at Artista, or even drinking at LaCarafe. 

 

People who choose to live downtown right now do so either because they need to be very close to their office or they are drawn to downtown living. People drawn to downtown are MUCH more likely to explore, spend, and visit than a mid-range business traveler.

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Mid range business travelers eat out every single night though. Even they probably won't blink any eye at spending 20-25 dollars on a meal.

The residents there have money too, but to eat out seven days and nights a week?

Also, there will be 80+ downtown homeless residents. Nobody will be able to build fast enough for them to move in, but they are likely to return.

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Phoenicia needs to sell food too. :)



Also you might be surprised how much we downtown yuppies eat out. I'm really lazy.

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I'd imagine a lot of downtown business travelers eat room service or in the hotel lobby.

 

Houstonians supposedly eat out more than citizens of any other American city. I'd imagine the average downtown resident eats out more than the average Houstonian. Demographics would likely back that up (higher incomes, more singles, more men, etc...)

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Springhill Suites: No room Service. No Restaurant.

Marriott Point Chaseres and convention goers. Will be eating most/all dinners close to hotel. On Good/reasonable budgets. Bodes well.

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Phoenicia needs to sell food too. :)

Also you might be surprised how much we downtown yuppies eat out. I'm really lazy.

While I see the benefit of both sides, I must point out that my wife and I live downtown and spend on average $3500.00 a month eating out. Albeit, probably less than $500.00 is spent in the downtown area. However, with more new restaurants opening, we are starting to walk to dinner a little more. Edited by Andrew Broadfoot

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If this hotel was going to be a high end hotel, then I might think the visitors would spend more downtown than Humble Tower Apartment residents. 

 

However, this is a mid-range hotel aimed at business travelers who will likely be on expense accounts. I doubt folks staying at Spring Hill Suites on a Wednesday night will be checking out shows at the Hobby, dining at Artista, or even drinking at LaCarafe. 

 

People who choose to live downtown right now do so either because they need to be very close to their office or they are drawn to downtown living. People drawn to downtown are MUCH more likely to explore, spend, and visit than a mid-range business traveler.

 

Travelers, even mid-range travelers are much more likely to explore and spend at restaurants 2-3 times a day than even the most intrepid downtown apartment resident.

 

Apartments have kitchens in which some people cook meals (or at least thaw a frozen something brought home from the grocery store.)   People staying in hotels, even if they have a kitchen in their rooms, most often eat out every meal of the day during their stay. 

 

Plus, the fact is, the hotel will almost certainly have more people residing in it than the apartments do.

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I'd imagine a lot of downtown business travelers eat room service or in the hotel lobby.

 

Houstonians supposedly eat out more than citizens of any other American city. I'd imagine the average downtown resident eats out more than the average Houstonian. Demographics would likely back that up (higher incomes, more singles, more men, etc...)

 

Room service at a Springhill Suites Hotel?   Get serious, man.   Springhill Suites offers free breakfast.  The rest of the day, downtown restaurants get the benefit.  You cannot make a serious case that this conversion will be bad for downtown restaurants.

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Room service at a Springhill Suites Hotel?   Get serious, man.   Springhill Suites offers free breakfast.  The rest of the day, downtown restaurants get the benefit.  You cannot make a serious case that this conversion will be bad for downtown restaurants.

 

Since the Marriott offers room service to Humble Tower residents currently, I see no reason why they wouldn't also offer room service to Springhill Suites.

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This seems like an awful lot of analysis dedicated to the economic impact of the loss of 82 residence units. If that loss of revenue has a severe impact on downtown restaurants (especially considering all of the current upside) then they were probably going out of business anyway.

There are two major residential projects in the near future and a major city initiative to support future development of that kind. Downtown's population is growing. Even in the worst case scenario, this is a minor setback.

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I agree with livincinco. Everyone knows that downtown needs more residents and hotel rooms. So the fact that we are adding 166 more hotel rooms is a plus. While losing 88 apartments is a minor setbeck, SkyhouseHouston (336 apts) and Finger's Ballpark apts (380-400 apts) will add ~720 units over the next couple of years. Also the old Texaco building will be renevated into apartments in the near future. Keep calm and carry on...

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Since the Marriott offers room service to Humble Tower residents currently, I see no reason why they wouldn't also offer room service to Springhill Suites.

 

Okay, got me on the room service.  But you and KinkaidAlum are kind of stepping on your message there.  

 

Earlier KinkaidAlum told us that people who will stay at a Springhill Suites are on tight budgets so will supposedly not be able to spend enough to benefit downtown restaurants (as if all downtown restaurants are uber-expensive).  Now we are to believe that those travelers won't go to restaurants because they are blowing their money on room-service meals?   Which is it, guys?  Tight-fisted travelers apparently going hungry or expense account spendthrifts living it up on room service?   ;-)

Edited by Houston19514

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I am not against the Spring Hill Suites. I like the idea of a midrange hotel option downtown and do think it will add to the overall vibrancy of the area. That said, I simply wish it wasn't coming at the expense of a wildly successful apartment building. 

 

It's not as if there's a shortage of vacant lots downtown for Spring Hill/Marriott to build on. Or, even better, why not put a Spring Hill Suites in a vacant building. There are several of those languishing on the market as well.

 

yeah, I know this location makes sense for Marriott because there's already a Residence Inn and Courtyard on site, but it still doesn't mean I have to like it.

 

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Most of the Humble Tower people are doing one of two things: Buying a home in the burbs or finding another place in downtown/Eado/Midtown.
I have looked at a few places, my number one is Sabine Lofts, well now called Marquis on Sabine. The Marquis Management seems to be a legit management company. They do a lot of things for their residents at the Marquis Lofts on Runnels street right outside of downtown in east downtown.

 

There are probably about 130 people in Humble Tower (I think there are about 8 kids in the building)
As far as eating out habits of Humble Tower residents. Most of the residents here do eat out majority of the week, but we don't eat in downtown all the time. Maybe one or two days a week do people eat downtown. Thursdays, Friday's and Saturdays are when a group of us will go out. Usually drinks followed by dinner. Most places we drink at are in downtown or midtown.

 

A few of my neighbors are only in Houston during the work week and have homes outside of the city somewhere.

 

As of today Sterling Group (Management Company for the entire building, including the hotels) has not given any of the residents an official notice. Sterling hasn't even been officially told about the plan to turn the building into a hotel. They are just not allowed to extend leases after 12/31/2013. All leases end before that with the exception of two leases. Mine ends 8/31, but they are allowing me to stay month to month after that at no additional cost. I just need to give them a 60 day notice as when I intend to leave. October 31st is what I am aiming for.

 

 

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Thanks for the first-hand info!! 

 

 

Most of the Humble Tower people are doing one of two things: Buying a home in the burbs or finding another place in downtown/Eado/Midtown.
I have looked at a few places, my number one is Sabine Lofts, well now called Marquis on Sabine. The Marquis Management seems to be a legit management company. They do a lot of things for their residents at the Marquis Lofts on Runnels street right outside of downtown in east downtown.

 

There are probably about 130 people in Humble Tower (I think there are about 8 kids in the building)
As far as eating out habits of Humble Tower residents. Most of the residents here do eat out majority of the week, but we don't eat in downtown all the time. Maybe one or two days a week do people eat downtown. Thursdays, Friday's and Saturdays are when a group of us will go out. Usually drinks followed by dinner. Most places we drink at are in downtown or midtown.

 

A few of my neighbors are only in Houston during the work week and have homes outside of the city somewhere.

 

As of today Sterling Group (Management Company for the entire building, including the hotels) has not given any of the residents an official notice. Sterling hasn't even been officially told about the plan to turn the building into a hotel. They are just not allowed to extend leases after 12/31/2013. All leases end before that with the exception of two leases. Mine ends 8/31, but they are allowing me to stay month to month after that at no additional cost. I just need to give them a 60 day notice as when I intend to leave. October 31st is what I am aiming for.

 

 

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Some are buying in the burbs? Seems strange. I guess they're not the same ones that already have the homes there.

Why are they going from one extreme to the other?

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Some are buying in the burbs? Seems strange. I guess they're not the same ones that already have the homes there.

Why are they going from one extreme to the other?

 

Starting families. Or at least the ones I have talked to. Well one of my good friends when they first moved in thought they had a mini pot belly big. He was the size of a teacup puppy. Fours years later he is now the size of mastiff! He weighs over 150 pounds and is quite aggressive if he doesn't know you and you don't have food to give him. There is no where in the downtown area that will take him. ~ Buying a house seems like the best option for them right now.

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Starting families. Or at least the ones I have talked to. Well one of my good friends when they first moved in thought they had a mini pot belly big. He was the size of a teacup puppy. Fours years later he is now the size of mastiff! He weighs over 150 pounds and is quite aggressive if he doesn't know you and you don't have food to give him. There is no where in the downtown area that will take him. ~ Buying a house seems like the best option for them right now.

 

or selling a pig.  ;-)

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Starting families. Or at least the ones I have talked to. Well one of my good friends when they first moved in thought they had a mini pot belly big. He was the size of a teacup puppy. Fours years later he is now the size of mastiff! He weighs over 150 pounds and is quite aggressive if he doesn't know you and you don't have food to give him. There is no where in the downtown area that will take him. ~ Buying a house seems like the best option for them right now.

It seems like the people described that live there should have the dough to live in town and send their kids to private school if they wanted. Of course I don't know the details.

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The place wasn't too pricy.

Oh ok, I was going off what Andrew Broadfoot said in earlier post that he and his wife spend 3500 a month on eating out. Guess he is the exception.

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