Hotel development next big investment
NEW HAVEN — Unless you plan it in advance, it may be difficult to get a hotel room in the city.
That interest in New Haven for business or pleasure is something that puts smiles on the faces of personnel in the city’s economic development office as they track the numbers and guide the most recent proposals to add hotel rooms through the approval process.
The desire for extended-stay hotels is borne out in two plans, coming on the back of an upgraded New Haven Village Suites at Long Wharf.
There are numerous other inquiries the city hopes are more than aspirational, while slow progress is being made on a hotel for the Continuum of Care site on Route 34.
Ginny Kozlowski, executive director of the Economic Development Corp./REX, said statistics show room revenues and occupancy for the hotels here are up year over year.
“We are at a very strong demand,” Kozlowski said of the leisure side, as well as the corporate and meeting sectors, generated around Yale University, Yale New Haven Hospital, the Knights of Columbus and biotech businesses.
“We have a good balance. We are not like a lot of other hotels in the state where they are dependent on leisure travel or the business travelers. We are pretty consistent,” she said.
Randy Salvatore first came to New Haven to construct the Novella apartments on Chapel Street and now is bringing housing to the Hill on property that had been fallow for decades and in his latest endeavor. But Salvatore also has jumped into the extendedstay hotel business.
Preliminary work already has begun on the 108-room hotel at the corner of Crown and High streets by Salvatore’s RMS Cos. He will pitch them to the academicians and researchers who currently can’t find accommodations within walking distance of Yale and the hospital.
In a hot market, he took over the approved project from Mod Equities and then tweaked it to appeal specifically to New Haven’s needs. He said he is interviewing a number of restaurants to locate at the hotel. Salvatore said he is not averse to also renting the rooms in a traditional hotel arrangement.
“It will be very fresh and different in terms of decor and the quality of the food offered. It will have extended-stay capability but the look and feel of a traditional hotel,” Salvatore said. He hopes to open in fall 2018.
Salvatore took advantage of the desire for New Haven real estate by selling the Novella last month for $39.6 million, less than two years after he built the 136-unit upscale complex on Chapel Street. It was bought by Twining Properties, which specializes in managing mixed-use properties near transportation hubs.
“I plan to put the proceeds back into New Haven,” Salvatore said.
A smaller extended-stay hotel option will be the 21 rooms at 85 Elm St. near the intersection of Church Street that will take up one floor of a proposed complex, topped by 105 apartments over five floors. There will be some sharing of amenities by those using the hotel and the apartment tenants.
This is David Kuperberg’s second project, which is adjacent to his conversion of the former Union & New Haven Trust Co. at Elm and Church streets from office space to 137 apartments that are 100 percent occupied.
Kozlowski predicts there will be more boutique hotels popping up, as well as the extended-stay variety.
A high-end example in New York City is the Waldorf-Astoria, which converted part of its hotel to either apartments or condominiums.
“It is a way of sharing those costs and amenities for guests, but also residents who would like to have a coffee shop in their lobby or be able to drop their laundry or dry cleaning off or get a better gym or a pool. It works well for both sides of the house,” Kozlowski said.
Renovations Kspark business
Juan M. Salas-Romer, managing partner at NHR Properties, was ahead of the curve when he invested in the New Haven Village Suites at Long Wharf. It recently hired the Waterford Hotel Group Inc. to manage the property.
He said Village Suites is the only hotel with kitchens in every room.
“We serve people who are looking for the convenience of a hotel, but the comforts of home,” Salas-Romer said. It has one- and two-bedroom units.
Salas-Romer said it was a good summer and the renovation they did last year helped increase the number of guests. He said he feels his hotel, as well as the hotel proposed by Salvatore, should satisfy this part of the market.
Salas-Romer said it is exciting that people are investing in New Haven.
“There is good momentum,” he said.
Yves-Georges A. Joseph II and his partner Jason Rudnick of RJ Development + Advisors LLC said they are actively pursuing a deal for a 130- to 160-room limited service hotel for the Route 34 corridor where Centerplan built the Continuum of Care headquarters.
“We have always been pursuing development of the Route 34 site. We are on the hook to do it and we have been working on it,” Joseph said. He couldn’t be more specific at this point for reasons of confidentiality.
“We are optimistic,” Joseph said.
New Haven Economic Development Administrator Matthew Nemerson said the developers are looking for someone to partner with to get the hotel constructed. A hotel at this location likely would attract visitors to Yale New Haven Hospital and Yale Medical School.
The Omni New Haven Hotel at Yale in the center of downtown on Temple Street is the largest full-service hotel in New Haven.
“They have done a spectacular job of upgrading,” Nemerson said of the privately owned, 306-room Omi with its 22,000 square feet of meeting space.
“We are thankful for their continuing investment and for their very professional management,” Nemerson said, as well as for the Davenport restaurant at the top of the Omni with its views of the city. The economic development administrator and the business owners all hoped for improved airline service to the area as an important component of growth, something that has been a dream for decades.
They experienced a recent setback, however, when the court ruled against Tweed New Haven Airport’s challenge to limits placed on the length of its runway, something that will be appealed.
Dana Zimmerman, director of sales and marketing at the Omni, said the lack of a fully functioning airport nearby “is not an easy sell” for a hotel.
She said the Omni can experience a crunch on the weekends, but it also can be slow early in the week.
Zimmerman said she was shocked to hear of Alexion Pharmeceutical’s decision to move its headquarters to Boston and lay off 250 people, although 450 workers will remain at its $100 million facility. “I’m not sure that business can easily be replaced,” she said of the conferences and visitors it brings to New Haven.
Nemerson and others, however, feel the state-ofthe-art lab space will attract biotech firms looking to expand as they outgrow incubator options.
For years, AJ Capital Partners had its eye on bringing its boutique hotels designed to meet the needs of an Ivy League clientele to New Haven and this year the Duncan Hotel on Chapel Street fit that profile.
Graduate Hotels is a division of AJ Capital and Ted Franzen is its president.
Franzen said after a full renovation, the Duncan will have 72 rooms for guests, a game room, a lobby coffee shop and it will continue to have a basement-level restaurant. A rediscovered ballroom to the rear of the hotel will be upgraded and is expected to be used for New Haven events.
The Duncan will slim down from its current 90 rooms, as the 38 tenants in single-occupancy units are moved to new apartments. Purchased for $8 million, the upgraded Duncan is expected to be ready by early 2019.
The city’s other high-end full service hotel, in addition to the Omni, is the 124-room The Study at Yale on Chapel Street, next to the Duncan in the heart of Yale’s arts district.
Paul T. McGowan, founder and principal of Hospitality 3 LLC and The Study brand, said they have worked hard to develop a loyal following in the past nine years, and when the university is in session, it can get busy. The Study plays host to graduate students visiting here, as well as parents of undergraduates, professors, dignitaries and researchers.
On the other hand, there is January, a typically slow time for everyone. “When the city is quiet, it is really quiet,” McGowan said.
He said they just invested in a hotel in Philadelphia. Having two universities demanding rooms, in addition to a science center and entertainment venues there, makes a big difference.
McGowan said he understands the attraction of an extended-stay hotel, which is less costly to run.
Other hotel options in New Haven are LaQuinta Inn and Suites on Sargent Drive, the Courtyard Marriott on Whalley Avenue and the New Haven Hotel on George Street.
In 2013, as then-Mayor John DeStefano Jr. was leaving and Toni Harp was elected to the office, the biggest project in the city was a $400 million proposal from Live Work Learn Play of Montreal.
It included 1,000 mixedunit apartments, up to 40 new businesses, 30,000 square feet of stores, a public square and a 4.5-star hotel to be located on the former Coliseum site at the entrance to downtown.
Four years later in New Haven, it is a very different situation, with 1,000 apartments approved and more coming on line. The inquiries for hotel space are increasing and the city actually needs the Coliseum acreage to remain a parking lot for hundreds of cars as plans gel for a second parking garage at Union Station.
Live Work Learn Play’s vision has been redesigned now that the city gave up on moving underground utility lines that would have opened up space, but added some $15 million to the cost, something that slowed it down for three years.
Nemerson said the new plan by Max Reim, who owns LWLP, is “100 percent” different than what was proposed in 2013, although it will still include a slimmed-down version of the same elements that have been moved around on the site.
Reim has preferred developer status for 14 years under a deal struck by DeStefano. Along the way, there has been a commitment for a Hyatt-brand hotel, although others might be in the wings.
To make it all work, Nemerson said it was always known that there would be a gap between what the developer would put into the project and what anount of public funds would be needed to pull it off. The city so far has committed $12 million in improvements.
That “serious conversation” on closing the gap is coming soon, Nemerson said, but it doesn’t mean the ambitious project won’t happen.
Still, Nemerson remarked that New Haven has gotten used to developments that don’t require a portion of public funding.
At the insistence of Gov. Dannel P. Malloy, nailing down the estimated LWLP 200-room hotel piece was tied to the release of $21 million in state funds to extend South Orange Street over Route 34 near Union Station.
That, too, has been adjusted, allowing design of that infrastructure fix to advance.
More importantly, “the state is taking some steps to release the funds for the infrastructure. We think that is an important project for the region,” said Tim Sullivan, deputy director of the state Department of Economic and Community Development. He said the construction design is ready and he hopes it will soon go out to bid.
Nemerson said Spinnaker Real Estate Partners, which will build apartments on a block bound by Orange, Audubon, State and Grove streets, is interested conceptually in adding a hotel at the corner of State near Olive Street.
Nemerson said they continue to have discussions with others interested in building on the parking lots along State Street, and Ikea, which owns the Pirelli building on Long Wharf, is looking for a use for that iconic structure and a hotel continues to be in the mix.
Joseph Roth, public affairs spokesman for Ikea, said whether it is offices or a hotel, it would take a developer with the funds and know-how to remove the contaminants there before a conversion. “If an appropriate use comes along, we would be interested,” he said.
“The hotel situation is very exciting right now. We have had a lot of interest surface over the last six to nine months. I think what we see happening with hotels is what we saw happen with apartments over the last three or fours years where the market is catching up with us and rediscovering New Haven as a really exciting place to invest,” said Steve Fontana, the city’s deputy economic development director.
“I think what we see happening with hotels is what we saw happen with apartments over the last three or fours years where the market is catching up with us and rediscovering New Haven as a really exciting place to invest.” Steve Fontana, the city’s deputy economic development director
Entrance to The Study, a New Haven hotel on Chapel Street.
Entrance to the Omni New Haven Hotel at Yale, on Temple Street in New Haven.
The Hotel Duncan was sold for $8 million and will be replaced with a boutique version.