Real estate colleagues questioned Justin Palmer’s purchase of a boarded-up, eight-story San Francisco office building for $17.7 million, almost double the price paid for it six years before. Then he told them his plan.

Palmer, co-founder of New York-based builder Synapse Capital, is redeveloping the property into a Yotel, a minimalist hotel brand whose signature feature is tiny rooms, or “cabins,” of about 175 square feet (16 square meters). That means Synapse can fit 202 revenue-producing rooms into a building that would accommodate just 94 were it a standard hotel, he said.

“People in the industry in San Francisco thought we were crazy until they figured out that we were fitting in two times the amount of keys,” said Palmer, who bought the property with Yotel’s largest shareholder in April and expects to open the hotel in 2017.

Yotel is finding that its small rooms are a big selling point as it seeks to expand globally. With land costs soaring in cities such as New York, San Francisco and London, the company is pitching itself to developers as a revenue-maximizing solution for small and odd-sized lots.

“You can unlock the potential from sites in an area where you don’t know what to do,” Chief Executive Officer Hubert Viriot, who’s based in Dubai and took the helm of London-based Yotel in May, said in an interview. “We fit pretty much everywhere.”

Global Expansion

Yotel, whose largest shareholder is Kuwait-based IFA Hotels & Resorts, currently operates four hotels. It plans to quadruple that number in the next four years, opening 12 new properties with more than 3,000 rooms from the U.S. to Asia.

On Singapore’s Orchard Road, an upscale shopping corridor, Yotel is working with Hong Fok Corp. to build on a 24,000- square-foot lot adjacent to the developer’s larger office-and- retail tower, the International Building. Singapore-based Hong Fok is constructing a 609-room Yotel, after initially assuming only a budget hotel would fit on the small site, Viriot said. Yotel also is planning a location at Singapore Changi Airport, set to open at the end of 2018, the company said today.

It also will open an outpost in downtown Miami, where Yotel shareholder Kuwait Real Estate Co. and Aria Development Group are planning a 250-room hotel within a larger residential project, said David Arditi, founding principal of Aria. The company bought the 15,000-square-foot development site on Northeast Second Street last year for $5.5 million.

Aria is looking to do more developments that will include a Yotel, such as in Miami Beach and Washington, D.C., Arditi said.

Williamsburg Trapezoids

In addition to its San Francisco project, Synapse is planning another Yotel in Brooklyn’s Williamsburg neighborhood, on trapezoid-shaped lots it acquired along the Brooklyn-Queens Expressway, Palmer said. Synapse will build a 110-room Brooklyn Yotel with as many as eight condominiums on the top floor, to be completed by the end of 2016, he said.

Synapse, which mainly redevelops apartment buildings and hasn’t built a hotel before, is planning to develop additional Yotels in other U.S. markets, Palmer said.

“Our view is to help build out the brand, which increases the value of our other projects,” he said.

Yotel, inspired by the small-space luxury of first-class airline service, began as an airport hotel in 2007 inside a terminal at London’s Gatwick Airport, offering 100-square-foot cabins for rent in four-hour blocks to travelers seeking a respite between flights, Viriot said. The brand expanded to terminals at London’s Heathrow and Amsterdam’s Schiphol airports the same year.

Manhattan Hotel

The company opened its first hotel in an urban center in 2011, when it bought about 230,000 square feet of space in Manhattan at Related Co.’s MiMA apartment-and-condo project at 42nd Street and 10th Avenue, just outside the Lincoln Tunnel. Yotel paid $315 million for the space, according to property- data provider Real Capital Analytics Inc.

Related executives “thought we were mad people,” when Yotel informed them of its plans for the space, Viriot said. “We told them we really don’t need a reception area, and they said, ‘Well, OK, you’re buying it.’”

At the 669-room Yotel New York, check-in is handled at computer kiosks that issue key cards and a receipt. It’s a space-saving feature that makes a large reception area and concierge staff unnecessary, Viriot said. A floor-to-ceiling robotic arm, called the Yobot, sorts luggage into storage lockers for guests whose rooms aren’t yet available or who have checked out.