Former Element Hotel in Lebanon sold, with plan to shift to short-term apartments

By JOHN LIPPMAN

Valley News Staff Writer

Published: 06-08-2022 11:52 PM

LEBANON — After sitting unoccupied for more than two years after an explosion damaged the building, the former Element Hotel on Route 120 will soon be perking back to life.

A Massachusetts private equity company that specializes in residential housing projects has acquired the former hotel from owner David Leatherwood and plans to convert it into a short-term residential building catering to employees at Dartmouth Hitchcock Medical Center, Dartmouth College and elsewhere who are in the Upper Valley for a short time or are looking for permanent housing.

The units will be ready for occupancy beginning in August, said Tony Librot, chief operating and financial officer at AAM15 Management LLC, the Burlington, Mass.-based buyer.

“Our goal is to provide short-term housing solutions to people in the Upper Valley. Given Dartmouth Health’s and Dartmouth College’s needs, it’s kind of a no-brainer,” Librot told the Valley News on Wednesday.

The purchase price “all in” was $17 million, Librot said.

The hotel opened in 2014 with 120 rooms at a cost of $20 million.

The Element was closed after an explosion and fire disabled the building’s mechanical system. It was already on its way to being converted into short-term housing under Leatherwood, who announced his intention last year not to reopen the hotel, which he said had struggled with bookings prior to the explosion.

Leatherwood, whose Norwich Partners also owns the Marriott Courtyard and Marriott Residence Inn hotels nearby on Route 120 in Lebanon, did not respond to an email for comment on Wednesday.

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Librot said the “vast majority” of the former Element’s units will be ready for occupancy between Aug. 1 and Sept. 1, and AAM15 this year is investing another $2.1 million to purchase mattresses, new kitchen appliances and TVs for the units.

One particular segment of the workforce in need of temporary housing is traveling nurses at area hospitals, some who have wound up living — at least during the clement season — in trailers at campsites in the Upper Valley.

The former hotel will consist of 88 studio units and 32 one-bedroom apartments.

Librot declined to say how much renters can expect to pay in rent other than describing it as “market rate.”

In Lebanon and Hanover, market rates can exceed $1,800 per month for a one-bedroom apartment, according to recent data collected by affordable housing nonprofit Evernorth.

Rents are even higher at newer luxury rental complexes; one-bedroom apartments at Timberwood Common and Emerson Place in Lebanon are currently listing for around $2,300 per month.

In addition, the former Element complex will have “24-hour concierge staff on site,” including an apartment for a live-in manager, amenities that will be factored into the rent, Librot acknowledged.

At present, the property is permitted only as a hotel, which means occupancy cannot exceed 120 days.

But Librot said AAM15 expects to go before the city to seek a variance to change the permit to allow multi-family apartments because there is demand in the market for extended occupancy beyond four months but shorter than a typical lease.

“The fact of the matter is the need for housing is so great in the Upper Valley, we would be remiss if we didn’t recognize that,” Librot said.

Whether or not zoning officials in the city will be persuaded to alter the permit is unclear, but Librot said that by allowing for multifamily occupancy, the city would capture tax revenue that otherwise as a hotel rooms and meals tax mostly is funneled to the state.

“We want to partner with the community,” Librot said.

The apartment vacancy rate in the Upper Valley has been less than 1% for years, forcing many employees in Lebanon, Hartford and Hanover to endure commutes as much as an hour or more away from their workplace.

Last week, eight local employers banded together to capitalize a $10 million fund that will be applied toward building 260 affordable housing units in which renters will pay below-market rents.

Although Evernorth identifies more than 1,000 apartment units as either under construction, permitted or in the permit pipeline in Lebanon, Hartford, Hanover and Claremont from 2021 to 2023, it is nonetheless thousands of units fewer than regional planners project will be required by 2030.

Contact John Lippman at jlippman@jlippman@vnews.com.

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