A potential fire sale by the United States government could be a boon for hotel developers looking for adaptive reuse projects.
The Real Estate Channel on Wednesday reported the proposed 2012 federal budget from President Obama includes cuts that could result in the largest real-estate sale in U.S. history by potentially selling 69,000 government-owned buildings.
Admittedly, some of the buildings could be saved from the auction block by being turned over to other government agencies, but imagine the boon it could be for specialists who turn old buildings into hotels. Even if only 1% of the buildings are turned into hotels, that’s 690 new properties. And while that’s not good news for those who want to keep the new hotel supply in check, it makes my mind wander.
Think of the great hotels that are already housed in former government buildings, including Kimpton’s Hotel Monaco in downtown Washington, which occupies the former U.S. General Post Office, or The Liberty Hotel in Boston, which is housed in what was once the Charles Street Jail. There are others in the U.S. and abroad—and with a little luck, there could be more.
What I like most about adaptive reuse of government buildings as hotels is the integrity of the structures. With many of them built 100 years ago or earlier, they are stout buildings with character. Hotel developers and architects love to maintain historical elements of old buildings, and ornate, old government buildings are the mother lode.
According to the Real Estate Channel article, potential buildings that could be on the block include federal courthouse buildings and IRS offices. Imagine the fun hotel marketers could have promoting a hotel that once housed an office occupied by the Tax Man!
The ulterior motive for the Obama administration is to trim US$1.1 trillion in government spending during the next 10 years. Selling buildings that are no longer needed is a logical step in helping reduce the deficit. If the hotel industry gains some iconic properties in the deal, that’s a good thing. The buzz it would create easily will outweigh the additional supply.