Your Dallas apartment high-rise might become a pop-up hotel

Steve Brown

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A Houston apartment landlord just signed one of the biggest leases in that city’s history.

Developer Camden Property Trust rented a block of 100 apartments in its new downtown Houston residential tower to a single tenant. More than a third of the 21-story high-rise will be rented to a Washington, D.C.-based firm for what it calls a "pop up" hotel.

Founded in 2017, WhyHotel leases big chunks of apartment buildings to use as short-term stay hotel space.

So far, the company has opened locations in Baltimore and Arlington, Virginia, turning sections of luxury apartment towers into exclusive hotel suites.

Checking WhyHotel’s reservation page, I see that you can snap up a 2-bedroom Baltimore apartment in the middle of next week for roughly $160 a night.

Sounds like a deal.

Since Dallas-Fort Worth is the country’s fastest growing metro area and economy, don’t be surprised if WhyHotel turns up here, too.

The D-FW area has more than 35,000 new apartments on the way, with about a dozen new high-rise rental projects either under construction or just completed. While demand for new apartments is strong locally, it would be tempting for a developer to fill a large section of a new rental community with a single lease.

"Several major apartment owners and operators are experimenting with the inclusion of some short-term rentals in their properties," said Greg Willett, chief economist at RealPage, a Richardson-based apartment sector service firm. "Pull a block of apartments in a new property beginning initial lease-up out of overall inventory, have a specialist in the short-term rental space operate them for a while, and then bring them back into general inventory as the rest of project finishes building its first resident base."

Willett said property owners can generate revenue on units that otherwise would sit empty during the initial leasing process,.

"Plus, with fewer apartments moving through initial lease-up all at once, the decrease in overall availability means achievable rents should tend to be slightly higher for the units being offered as traditional apartments," he said.

Some North Texas apartment community owners already are dabbling in the short-term stay sector with units up for grab on websites including Airbnb and Vrbo.

But WhyHotel takes the concept to a whole different level, providing a "welcome lounge" and 24/7 host team to oversee the operation.

"Look for some properties in Dallas to begin offering short-term rentals pretty quickly," Willett said. "The concept is worth exploring in neighborhoods where apartment construction is heaviest, especially in spots like the Victory area where there are multiple lease-up projects located adjacent to each other."

That means some of the folks you meet in your apartment tower elevator aren’t neighbors but visitors in town for a weekend sports event.

"What’s unclear at this point is whether or not renters signing long-term leases will care that a portion of the property is being operated as what’s essentially a pop-up hotel," Willett said. "If long-term renters object to the degree that it slows a new project’s leasing velocity or lowers pricing power, short-term leasing will disappear quickly."

There’s also another possibility.

"If the short-term rentals are clustered on select floors of high-rise buildings or in specific spots within mid-rise projects, it’s possible that many long-term renters won’t even realize that the short-term rental operations are even there," Willett said.

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