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Putting New Hotels in Old Buildings - What Are The Risks?

Chicago is going through a mini-boom of new hotels, many of which are converted old buildings. While these adaptive re-use projects can be very profitable, historic buildings may carry particular risks. Bob Geiger discusses some of the issues you should be on the look-out for.

By Bob Geiger | Updated on October 29, 2014

For the past two years, Chicago has been going through a mini-boom of new hotels. The city’s hotel capacity in 2013 was 34,000 rooms.  Nate Sahn, CBRE’s hotel practice leader, recently said in Urban Land that he expects that to increase by 15-20 percent by 2016.  While some of this inventory will come from mixed-use new construction, many of these new hotel projects are planned for existing downtown landmark buildings, with developers investing in extensive rehabilitations that convert historic buildings to be used as boutique or chain hotels while retaining significant historic and architectural elements.

Some examples of such adaptive reuse projects in downtown Chicago include: the Burnham hotel in the old Reliance Building and the mysterious new Virgin Hotel project to open in the restored Dearborn Bank Building from 1928.  There is also the vintage office building at 100 Monroe Street that will house the Hyatt Hotel, which is currently undergoing a conversion that will “emphasize Chicago’s architectural history and the hotel’s branding and marketing will play up the 22 story Frank D. Chase-designed building’s past”.  In the Fulton Market district, the trendy Ace hotel chain is opening in an old industrial building; while the iconic Hard Rock Hotel Chicago has taken over the 40 story beaux-arts Carbide and Carbon Building at 230 North Michigan Ave a block away from the Chicago River. 

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