Ho­tel de­vel­op­ment next big in­vest­ment

The Middletown Press (Middletown, CT) - - FRONT PAGE - By Mary E. O’Leary

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.

Busy days

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.

Mov­ing ahead

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

Peter Hviz­dak / Hearst Con­necti­cut Me­dia

En­trance to The Study, a New Haven ho­tel on Chapel Street.

Peter Hviz­dak / Hearst Con­necti­cut Me­dia

En­trance to the Omni New Haven Ho­tel at Yale, on Tem­ple Street in New Haven.

Mary O'Leary / Hearst Con­necti­cut Me­dia

The Ho­tel Dun­can was sold for $8 mil­lion and will be re­placed with a bou­tique ver­sion.

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