Converting downtown office space for short-term rental

9 Replies

Does anyone here have any experience converting commercial zoned office buildings to short term rentals in Spokane? I've begun looking into the process with the city and it sounds like it will require a change of use to hotel/motel which will most likely come with additional requirements. Fire suppression systems = expensive so if there are ways around this I'd love to know about it. I have friends in other markets that have used this strategy and seen excellent returns.

Hello Caleb, I am not an expert in this by any means, but essentially, if you convert commerical into a residential condo, you could lease them out nightly, which many not have the same requirements of the hotel/motel parameters. My guess though is they are going to still want fire supression in place. Curious to hear any other thoughts on this. I know the building that I have my office in, the Minnesota Oakley is residential/commercial condos.

I don't know about your area but your first step is zoning.  Most commercial zoning has a subset - IE office space, warehousing, etc.  My guess is that "hotel" will not be under these definitions if it was previously an office building.  I am guessing it will not be a conditional use either so you would have to apply for a change in zoning.  You may want to talk the city and see if they would support the project before paying the fees and putting  your time to it.  

On the fire suppression system - I believe this is a building code requirement, not a state/local requirement.  I can't see you getting around that.

According to Section 17C.316.030 :

In zones where Retail Sales and Service uses are allowed, limited or conditional uses, short-term rentals may be regulated either as a Retail Sales and Service use or as hotel motel.

This states that short-term rentals operating in commercial zones are regulated differently than residential zones. 

@Melissa Murphy Are you familiar with converting office to condos/apartments? I think you're right though that once converted to condos, there shouldn't be any issue with renting out units short-term.

@John Woodrich The spokane zoning doesn't differentiate between office and non-office in commercial zones. 

@Caleb Webster Best be is to just call the city and ask if you can't figure it out through city code.  I am surprised that "commercial" can mean anything from hotel, to warehousing, to auto dealer, to office building in your area...  Most cities around here have defined permitted uses and defined conditional uses....  The section you posted seems to indicate that they must have permitted uses and not a general "commercial" zoning.  If commercial zoning was ok for all the business types I mentioned there would be no need for conditional uses...

If it isn't zoned for your plans you could also discuss a change in zoning. If the city isn't on board with your idea the likelihood of it passing the planning commission is minimal.

@Caleb Webster

Based on your posting of the zoning ordinance, it looks to me that you'd want it classified either as Retail Sales and Service or Hotel/Motel depending on the lesser of the building code requirements (assuming you're looking to minimize costs).  You may have to have fire suppression in both, I'm not sure.  But with that being said, if your model supports the cost of fire suppression and any other upgrades, it seems as if your use would be allowed.  It might be a conditional use but technically, the City Council shouldn't be interpreting this based on what they want to see but rather on the code requirements and that you meet and conditions to the use.  But that isn't how it always works so it depends on the Council's feelings.  As @John Woodrich said, you'll want to take their temperature at a Planning Commission meeting first and a City Council meeting second.  For conditional uses, the Planning Commission needs to recommend it to the Council and the Council can then review it for approval.  They typically go on the Commission's recommendations.  

This seems doable to me but you'll have likely to go through the proper channels.  Not that you're try to pull the wool over anyone's eyes, but I understand that you'd like to find a loophole to exploit (in a good way).  

@Josh Collins Thanks for weighing in! The cost to retrofit with fire suppression isn't prohibitive but it does affect the CoC until refi. I have no doubt that the use would be allowed, I'm just trying to figure out the most cost effective route to go. Condo conversions may be cheaper and would probably not require fire suppression.

@Caleb Webster I believe anything over 3 units is required to have fire suppression under current building code.  You could get this answer confirmed by calling the building department...  

You sound certain that your use would be allowed - I can tell you with certainty that this would not work without a zoning change in any city I have invested in.  I am not going to research it for you but in most cities it isn't this flexible.  This answer is also available for free by calling the city or talking to a planning commission member...

The problem with that in any country is that one has to get the government involved from the start, which increases over heads to ridiculous extent. Next thing you know you need to cater for every possible outcome at huge costs. Like every investment if the numbers work, taking in to account the ridiculous costs added on by government, then it could be viable. Especially with the high costs of real estate within already existing high population areas.