Multifamily Owners Are Seeking Ways To Boost Cash Flow. An Austin-Based Hospitality Firm Has A Plan

After years of unprecedented growth, the multifamily industry is slowing down, pushing building owners to get creative and rethink traditional business models. As multifamily vacancy rates are projected to trend upward, property owners are looking toward alternative ways to source revenue and fill vacant units. 

Some property owners are turning toward apartment-hotel managers and brands such as Locale to bolster their portfolios' cash flow. This Austin-based company can transform all or a portion of an owner’s residential property into furnished rentals for short- and medium-term stays.

“More and more travelers are looking for upscale and reliable residential-style accommodations,” Locale founder and CEO Nitesh Gandhi said. “With Locale, guests enjoy the comforts of a thoughtfully furnished apartment with the service and amenities of an upscale hotel, providing remarkable value for their stay.”

Gandhi said Locale’s “aparthotel” units come with separate living and bedroom areas, a full kitchen, in-unit washers and dryers, and premium guest amenities. In addition, most Locale buildings feature resort-style pools, expansive fitness centers and secured on-site parking. Guests enjoy the perks of Locale technology for a digitally native experience, from free high-speed WiFi to smart home products, mobile check-in and a text-based concierge, he said.

Since the company’s founding in 2016, Locale has hosted guests for more than 200,000 nights, with more than 30% of bookings originating directly via Locale. There are 11 properties in Locale’s portfolio spread across six major metros: Dallas, Houston, Austin, Phoenix, Nashville and Silicon Valley. 

“We work to unlock more net operating income per unit compared to traditional multifamily models,” Gandhi said. “Our aparthotel model encourages faster lease-ups, fewer vacancies and no turnover costs.”

When Locale partners with multifamily owners, it is often through a management agreement. In this structure, Locale earns a base fee and incentive fee after the owners receive a priority return, aligning incentives and providing owners with significant cash flow upside. 

The two ways in which Locale operates and manages these properties are either as full-building aparthotels or full floors in new multifamily developments. Locale’s aparthotels typically generate a 25% to 40% NOI lift above traditional multifamily rent, Gandhi said. 

“Owners utilize our tech-enabled management platform as a one-stop solution for their properties,” Locale Head of Real Estate and Asset Management Woody Wedel said.

Wedel said the company's in-house design team will spearhead the design, procurement and opening of the units, while its city operations team will have boots on the ground to ensure a smooth guest experience. Locale's centralized team works to optimize performance from daily pricing, marketing and sales to regulatory and monthly reporting. 

Locale prioritizes urban markets in the top 50 metropolitan statistical areas with year-round appeal. This year alone, the team has opened five new locations: Locale Menlo Park, Locale Victory Park, The Eighteen, Locale The Gulch and Locale Phoenix Midtown. 

The Eighteen, located in the East Nashville neighborhood, opened in April. The property features one- and two-bedroom aparthotel units, plus two penthouses. Designed by Locale’s in-house team, the property features upscale, contemporary finishes, and guests are offered a wide range of amenities, including a rooftop terrace where they can enjoy views of the Nashville skyline, Wedel said. Locale operates the entire building.

The firm’s most recent opening in August, Locale Phoenix Midtown, expanded Locale’s footprint into Phoenix. The firm has converted 27 apartments within The Dinerstein Cos.' new Class-A development called Aspire Park Central into aparthotels, reducing lease-up time and generating incremental cash flow for ownership. This property has a range of amenities, including a pool, hot tub, sky deck, fitness center, resident lounge, coworking space and parking.

“We’ve expanded in a range of cities this year and are eyeing more metropolitan areas as we move into 2024,” Wedel said. “We’ve signed deals in Philadelphia, Madison, Wisconsin, Baltimore, Tampa, Chapel Hill and greater NYC. Our Philadelphia, Chapel Hill, greater NYC and Madison locations are set to open next year. We’re expanding rapidly, and we’re excited for what’s next.”

For further information about Locale, go to locale.com or contact the company at [email protected].

This article was produced in collaboration between Locale and Studio B. Bisnow news staff was not involved in the production of this content.

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