As remote work reshapes how we use commercial real estate, a growing trend is emerging in major U.S. cities: converting underused office buildings into hotels. In cities like Nashville, where tourism is booming and older office stock remains underutilized, this creative reuse strategy is gaining real traction.
Crain Construction has spent decades building hospitality spaces and completing adaptive reuse projects across Nashville. With deep roots in the community and a design-build approach, we help clients navigate the complexities of these conversions while balancing short-term needs like budget and timeline with long-term goals like value creation and sustainability.
In this post, we’re diving into the increasingly popular topic of transforming office buildings into hotels. We’ll explore what’s driving the demand, the benefits and challenges, and what developers should consider before making the leap.
What’s Fueling the Shift in Transforming Office Space into Hotels?
Since 2020, office vacancy rates have climbed nationwide, and Nashville is no exception. Class B and C office buildings—those that may lack modern amenities or energy efficiency—are especially underutilized. According to CBRE, Nashville’s office vacancy rate has hovered near record highs in recent years, particularly downtown.
Meanwhile, Nashville’s hospitality industry continues to thrive. The city welcomed over 16 million visitors in 2023, and hotel demand remains strong as events, conventions, and leisure travel drive foot traffic. Developers are seeing an opportunity to repurpose undervalued office properties to meet this hospitality demand, especially when paired with incentives like historic tax credits and city-backed redevelopment programs.
Why Consider an Office-to-Hotel Conversion?
Here are five compelling benefits for developers exploring this path in Nashville:
1. Location, Location, Location
Many underused office buildings are in prime downtown locations that are walkable to Broadway, the Gulch, or the Music City Center. These areas are ideal for boutique hotels, and a well-executed conversion can place your project right in the heart of the action.
2. Lower Acquisition Costs
As office property values have dipped, acquiring an existing building can be more affordable than ground-up development. Developers can benefit from a lower initial investment while still commanding premium nightly rates in high-demand areas.
3. Speed to Market
In some cases, converting an existing structure can be faster than starting from scratch, especially when zoning and permitting align. That means developers can capitalize on market demand more quickly.
4. Unique Hotel Concepts
Existing office buildings often possess unique architectural features and layouts that can be leveraged to create distinctive and boutique hotel experiences, appealing to travelers seeking something beyond standard hotel offerings in Nashville’s increasingly diverse hospitality landscape. This can be a significant differentiator in a competitive market.
5. Access to Tax Incentives
Nashville offers tax incentives, including Tax Increment Financing (TIF) and Tax Abatements, to support the conversion of office buildings into hotels. Projects that preserve historic features or revitalize underused properties may also qualify for tax credits, grants, or other public-private partnership opportunities.
Key Challenges to Overcome in Converting Office Space into a Hotel
Of course, converting office buildings into hotels isn’t without obstacles. Here are a few challenges developers should be prepared to tackle, especially in the Nashville market:
1. Major Infrastructure Upgrades
Most office buildings weren’t designed for overnight stays. Plumbing, HVAC, electrical, and life-safety systems (like sprinklers) must often be significantly upgraded to meet modern hotel standards.
2. Smart and Efficient Design
Office floor plans can be deep and irregular, which can make it tough to carve out hotel rooms with natural light and efficient circulation. Creative design is essential, especially when working within the constraints of a high-rise or historic structure.
3. Navigating Nashville’s Zoning Hurdles
Changing a building’s use from office to hospitality may require rezoning, special exceptions, or conditional use permits. Local knowledge and relationships can make a big difference in navigating Nashville’s building and code regulations effectively.
4. Complex Financial Structuring
Retrofitting an existing office building for hotel use can be a financially intricate undertaking. The costs associated with extensive structural modifications, MEP system upgrades, and interior build-out can be substantial, often requiring developers to explore creative financing solutions.
Nashville Hospitality, Reimagined: Two Unique Crain Projects
Crain has experience with several adaptive hospitality projects in Nashville. Two of our favorites are The Fairlane Hotel and AC Hotel Nashville Downtown (a Marriott tri-brand hotel). Each project helped preserve architectural features and utilize unconventional spaces to maximize capacity.
Breathing New Life into History: The Fairlane Hotel
Imagine transforming a solid, former bank headquarters into a chic, mid-century modern boutique hotel in the heart of downtown Nashville. That’s precisely what Crain Construction achieved with The Fairlane Hotel. The project demanded intricate pre-planning and engineering, including the ambitious conversion of rooftop mechanical space into a stunning penthouse with a wraparound terrace. Our team also extended existing elevators to reach an additional story. This project exemplifies our team’s ability to reimagine existing structures with a keen eye for design and complex structural adaptations to create a unique and desirable hospitality destination.
Unexpected Transformations: Adding Rooms at the Marriott Tri-Brand
In a testament to innovative problem-solving, Crain Construction recently expanded the Marriott Tri-brand hotel in downtown Nashville by creatively repurposing an entire floor of the existing parking garage into 36 new guest suites. This unconventional conversion presented unique challenges, including meticulously navigating post-tension cables and electrical wiring to install new plumbing. We also took on the critical task of leveling sloping garage floors without adding undue structural weight. All of this was accomplished while maintaining ongoing hotel operations, minimizing guest disruptions, and managing a tight site footprint for materials and equipment, showcasing Crain’s adaptability and commitment to seamless execution.
Final Thoughts: Making the Right Moves in Nashville
Converting office buildings into hotels isn’t just a response to changing real estate trends—it’s a strategic move that can unlock value in untapped assets and contribute to the vibrancy of downtown Nashville.
If you’re considering a project like this, having the right team matters. Crain Construction brings decades of hospitality and adaptive reuse experience, a deep understanding of the Nashville market, and a collaborative approach that puts your goals first. We’d be happy to talk through your vision, explore feasibility, and answer any questions you might have about navigating these complex projects.
Contact our team, and someone from our leadership team will follow up.
