Peg Companies targets Northern Dallas in hotel conversion

A resi conversion is on the way in Far North Dallas.

Sonesta ES Suites hotel on Alpha Road will soon be called Avia Apartments on Alpha, according to the Dallas Morning News.

Developer Peg Companies plans to convert the 114-room hotel into a 114-unit rental community. The Utah-based company describes the property as “part of a large portfolio of extended-stay hotels that Peg Cos. has acquired for the conversion into quality Class B multifamily housing communities.”

The near 100,000-square-foot hotel, off the Lyndon B. Johnson Freeway at Central Expressway, was built in 1997. It was formerly the Hawthorn Suites Dallas Park Central before Sonesta added it to its portfolio in 2020.

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The move bucks two major metroplex trends. For one, investors and developers alike are extremely bullish on Dallas-Fort Worth’s hotel market. Secondly, apartment demand in the region just took its biggest hit in five years with net leasing dropping by more than 5,000 units in the third quarter.

Peg has done projects like this before. Having raised $130 million for the conversion program, the developer’s Peg Extended Stay Conversion Fund has bought 15 extended stay hotels so far. One of its Avia conversion properties is in Irving, and in May, it purchased nine extended stay hotels, including this North Dallas property.

“The properties lend themselves to efficient and cost-effective conversions,” Peg’s Alex Murphy said in a statement. “Because by nature, most extended stay hotels already possess the critical features for comfortable apartment living — private entrances, full kitchens, convenient amenity packages — these types of acquisitions are ideal for our hotel-to-apartment conversion process.”

— Maddy Sperling