By Amanda O’Brien
Wealth of Geeks

The volume of hotel rooms currently being built in the United States hit its highest level in 16 months, according to .

While globally, the real estate information and analytics company finds hotel construction has dropped or leveled off, the U.S. has more than 157,000 rooms under construction, and another 600,000 in the planning stages.

Even though numbers have not fully rebounded to pre-pandemic levels (the U.S. peaked at 220,000 new rooms opened in April 2020), they demonstrate strong demand despite the headwinds of inflation and high interest rates.

U.S. cities leading the hotel growth

According to a recent Lodging Econometrics report, Dallas dominated the U.S. charge with 22,392 rooms in the works. It’s the fastest-growing metro area in the U.S., and there are 189 new projects on the horizon.

Dallas is followed by Atlanta, the third-fastest growing metro area in the U.S., which has 159 new projects planned, comprised of 18,522 rooms.

California’s Inland Empire set a new record with 124 projects and 12,569 rooms. Luxury, extended-stay, and residential hotels are anchoring the growth, as well as an influx of new hotels designed for large gatherings.

Luxe residential hotel developments on the rise

The Auberge Resorts Collection will open The Knox in Dallas in 2026. This boutique 5-star hotel, billed as a high-end retreat in the heart of the ritzy Knox Street area, will feature 140 rooms, 48 private residences, and over 3 acres of retail and dining along the popular Katy Trail.

One of the most anticipated new hotels in the U.S. is the $750 million Four Seasons Turtle Creek. It is expected to open in 2027 with 230 rooms, including 118 private homes. At 35 stories, it will be the tallest building in Turtle Creek and alter the Dallas skyline. Conceptual designs show culinary reasons to take note of its development. The hotel will house Zuma, a multiple award-winning Japanese restaurant with 14 locations globally.

From the AIC Hotel Group — chef Nobu Matsuhisa, actor Robert De Niro and producer Meir Teper — Nobu is set to open a hotel near Orlando’s theme parks in 2026 with an estimated $75 million price tag. It will offer 300 rooms, including eight villas and 50 residences.

Further west, Grand Hyatt Deer Valley is slated to open in late 2024 in Park City, Utah. As part of Deer Valley Resort’s expansion, the hotel will coincide with the addition of 16 new ski lifts and a 10-passenger gondola. The largest hotel under construction in Utah, the Grand Hyatt Deer Valley will feature 442 rooms and 55 private residences.

A prospective Ritz-Carleton project in Nashville has stalled, but other high-end offerings still make headlines. The St. Regis Hotel and Residences is expected to break ground downtown in 2025. Early plans show the building will be 39 floors, with 177 hotel rooms and 111 on site residences, as well as a fine dining restaurant and a full-service spa.

The boutique hotel boom

The Joie de vivre (JdV) by Hyatt recently announced it will build the $30 million, 125-key Chambray Hotel in the suburb of Roswell, Georgia, designed to honor the area’s milling past. It’s set to be a 5-story mixed-used building and should be completed by 2025. Hyatt plans to include a ground-level restaurant by Atlanta’s Indigo Group, a rooftop café, a 24-hour market, a fitness center and meeting space.

The recently completed Forth Atlanta, a $150-million, 196-room, 16-floor luxury boutique hotel development, opened this summer in Atlanta’s historic Fourth Ward neighborhood. Thirty-nine of its rooms are designed for extended stays. The hotel will also house a member-only club and four restaurants.

New York’s hotel scene is never dull, and there are a few buzzy properties in the works. The little-known Marin Architects, under the H Hotel LLC, are building the 42-story tower with 173 luxury guest suites off 39th Street, overlooking Bryant Park, for mid-2025 completion. The building will have a presence on the park’s iconic skyline, featuring an up-lit cantilevered cap and rooftop bar. Down below, there are plans for restaurants and an outdoor plaza.

The Chloe Nashville is an upcoming boutique hotel set to open in late 2024 in Hillsboro Village, just south of Music Row. It will be an intimate property with just 19 guestrooms in two historic Craftsman-style homes, along with a newly constructed third building that will add ten more guestrooms, a restaurant kitchen, and an outdoor pool bar.

New hotels catering to gatherings

In downtown Atlanta, the $155 million Anthem boutique hotel is expected to open in 2025 with 292 rooms as part of the Centennial Yards mixed-used development. Located across the street from Merecedez-Benz Stadium, it will open in time for Atlanta to host several World Cup games.

The largest new project set to open is Marriott‘s 1,600-room Gaylord Pacific Resort & Convention Center in Chula Vista, California. Expected to open in Spring 2025, it is a few miles from downtown San Diego and includes nearly 500,000 feet of indoor and outdoor meeting spaces.

The VAI Resort in Glendale, Arizona, with 1,100 rooms, is the second-largest U.S. hotel under construction and is set to open in phases starting in 2025. The $1 billion, 60-acre resort will be the largest in Arizona. It will feature four towers, a $40 million, 360-degree concert stage, and a 52,000-square-foot party island in a 6-acre lagoon. Located across from the soon-to-open Mattel Adventure Park, it aims to attract both locals and families.

This article was produced by Media Decision and syndicated by Wealth of Geeks.

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A Vancouver, Washington-based firm plans to break ground in August on a seven-story AC Hotel by Marriott on the Vancouver riverfront.

The $50 million hotel, expected to appeal to business travelers, will have 150 guest rooms and two floors of above-ground parking on the second and third floors. It’s the latest ground-up project for Vesta Hospitality, which in the past has mostly used a different strategy.

“Our primary focus has been acquisition of product and repositioning for better value of product,” Vesta CEO Rick Takach said.

The building will also have about 5,000 square feet of top-floor office space that Takach said he may take for Vesta.

In the case of the AC Hotel, Vesta took a gamble on the chance to be part of new development on Vancouver’s south-facing Columbia River frontage.

“We wanted to be down on the waterfront,” Takach said.

The project comes amid a rapid transformation of the area. Gramor Development is overseeing a massive 20-block redevelopment of a former Boise Cascade paper mill site nearby.

The AC Hotel will occupy land leased by the Port of Vancouver USA. Takach agreed to build the hotel to Leadership in Energy and Environmental Design gold standards as a result of negotiations with the port. He also agreed to build 160 parking spaces for the fast-growing area.

Takach said he turned his attention to the port’s land after declining to meet Gramor’s asking price for a parcel at The Waterfront Vancouver.

Takach said he’s interested in bringing in additional investors for the AC Hotel project, which is in an opportunity zone. The tax designation helped attract construction financing from Rockbridge Capital of Columbus, Ohio, a frequent Vesta partner.

DLR Group is designing the AC Hotel, and Camas, Washington-based Robertson & Olson Construction is serving as the general contractor. Otak is the engineer, and Urban Resources Inc. is the developer’s representative. Robertson & Olson’s experience working on the Vancouver waterfront and its relationships with subcontractors made it an obvious choice, Takach said.

Meanwhile, Vesta is also closing in on a purchase of the Cannery Pier Hotel, a 15-year-old, 46-room hotel that juts into the Columbia River in Astoria. Vesta is under contract to buy the hotel for $13 million, Takach said. The property is being offered by the estate of Astoria developer Robert “Jake” Jacob, who died last year.

Takach is waiting on approval of a waterway lease from the Oregon Department of State Lands before the transaction closes.

“I think it’s arguably an irreplaceable asset,” Takach said, noting development of the hotel took more than a decade.

Takach said he meets with Vesta’s acquisition team every Friday to review hotels for sale across the United States. Currently, the company owns 12 hotels, but that could change, he said.

“It’s a good time to sell,” he said.

Notably, the company has avoided the crowded hospitality market in Portland’s Central City. Takach described Portland’s hotel market as “in one word: scary.”

More than 1,900 hotel rooms are in development or under construction in central Portland, including the 600-room Hyatt Regency at the Oregon Convention Center, the 486-room Toyoko Inn, the 251-room Ritz-Carlton at Block 216, the 170-room Hyatt Place in the Pearl District, the 250-room Hyatt Unbound and the 179-room Moxy.

“As an industry, we try to do this to ourselves every few years,” Takach said of the rapid expansion.

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Portland’s hotel industry is in the midst of a booming expansion that is raising concerns that developers are arriving late to a long period of economic growth.

A Travel Portland tally of the hospitality development pipeline shows 2,728 rooms on the way. If built, the hotel developments would expand Central Portland’s room count by 35 percent by 2020 – an amount that one hotelier warns will be a “shock to the system.”

“I worry about the market’s ability to absorb the supply medium-term,” said Bashar Wali, president of Provenance Hotels, which owns several boutique hotels in Portland. “Long-term, the supply momentum is going to slow down. It doesn’t make sense anymore.”

Projects including the $50 million, 204-room AC Hotel Portland have opened in recent months, yet more hotel developers are looking to jump in with proposals that have yet to enter the city’s design review hearing process, according to stakeholders.

Brisk hospitality business in Portland is being supported by strong population and job growth. Portland hotels were 82.3 percent occupied in March, up 4.1 percent from March 2016, and 74.4 percent for the year, according to research firm STR.

As average daily rates and occupancies showed impressive strength, hotel groups began rushing into the market. National brands including Hyatt, Hampton, Hilton, Marriott and Radisson all wanted to be in Portland. That supply is on track to be added to the market in the next two to three years.

The flood of new rooms is prompting some people to question whether developers could overbuild. Already, signs suggest that some hospitality chains are looking to exit the market. The Porter Hotel, part of Hilton’s Curio brand, is on the market, Wali said. The 299-room hotel, under construction at 1355 S.W. Second Ave., hasn’t even opened.

“That was another indication that says to us the market is definitely turning,” he said.

Provenance is evaluating the offering, but so far, it has been unable to come to terms with the developer, The Widewaters Group of Syracuse, N.Y.

“I don’t know if we’ll get to where they want to get in terms of pricing,” Wali said.

The Widewaters Group did not return a message seeking comment.

Even as some companies are looking to reduce their exposure to Portland’s hotel market, others are considering getting in. Plans for an 11-story, 171-room hotel at Southwest 10th Avenue and Alder Street in downtown’s West End were revealed in April public notices. The project is from Graves Hospitality, based in Minneapolis, and design firm DLR Group‘s Portland office.

The property, home to a number of popular food carts and a surface parking lot, is owned by the Goodman family.

Benjamin Graves, president and chief operating officer of Graves Hospitality, visited Portland on Tuesday to meet with city officials, food-cart operators and others near the proposed project site.

“We’re hearing what everyone’s wants and needs are in the neighborhood, and hopefully we can do something the neighborhood can be proud of,” Graves said.

Graves said he’s interested in accommodating the food carts at Southwest 10th Avenue and Alder Street as the hotel proposal goes forward.

“That’s definitely something that we’re considering and exploring at the moment,” he said.

Graves Hospitality develops, owns and manages hotels across the country. The company works with several major hotel brands, and is a preferred developer for Moxy, a Marriott brand.

Graves said he’s interested in bringing a hotel to Portland, but the project on the Goodman family lot isn’t set yet.

“We’re just in the exploration phase, but we’re spending real time, energy and money in this process,” he said.

New projects must contend with costs for land and construction that have grown along with the economic cycle. Yet for a prospective developer such as Graves, Portland’s strong fundamentals continue to beckon, and costs remain below those for comparable West Coast markets like Seattle and San Francisco. Prices for steel, for example, have moderated and are below year-ago levels.

“From a relative perspective, if you’re looking at other markets, cost to build in Portland is still achievable,” Graves said.

Portland’s hotel development pace is similar to those in other fast-growing cities, and more growth is supportable, Graves said.

“We don’t think there’s a bubble right now,” he said. “I don’t believe Portland’s as frothy. There are markets we feel could use some breathing room – New York comes to mind.”

For developers and investors, a project’s success depends in part on when they intend to sell. Developers looking to flip a hotel project in the next few years may be in for a tough exit, Wali said.

“If you are a short-term investor for private equity, any of the traditional Wall Street investors, your hold horizon is typically three to five years,” Wali said. “We’re in the fifth, sixth year of our run. You’re now starting to come into the market. It’s going to take you two to three years to build, and if you’re going to hold for another two to three years, your contemplated sale of the asset to realize your returns is essentially at the bottom of the next cycle. If you don’t think it through that way, and your intent is to flip, you’re going to be hurt on your exit.”

Graves Hospitality holds its properties for five to 25 years, Graves said.

“It really is just a function of market conditions, our partner and how we feel about the marketplace itself,” he said.

Another new proposal calls for demolishing an existing quarter-block building at 600 S.W. Fourth Ave. to construct a 15-story, 215-room hotel. SERA Architects was listed as the applicant for an early assistance meeting, but the meeting was canceled. The identity of the developer was not listed, and the architect did not return a message seeking comment.

By far the largest hotel in the pipeline is the Hyatt Regency due to be built near the Oregon Convention Center. The hotel, expected to open in late 2019, will bring 600 rooms to market. How that hotel will affect others is among the most important questions looming over the local hospitality industry.

The Hyatt Regency may draw primarily from special events held at the Convention Center and nearby Rose Quarter. Only time will tell if the hotel creates its own demand, or as Graves said, “if it’s just going to suck demand from the existing hotels.”

Airbnb and competing services add another wrinkle.

“Airbnb is essentially the equivalent of an 1,800-room hotel in the market, day in and day out, competing with us,” Wali said. “Anyone who thinks Airbnb is going away has their head in the sand, because they’re not going away.”

In today’s hotel market, local and national developers alike are pushing boutique brands.

Provenance is expanding downtown with construction of the Woodlark Hotel at Southwest Ninth Avenue and Alder Street and a renovation and rebrand of the Westin, built in 1998 at 750 S.W. Alder St., into a new offering called Dossier.

Woodlark construction has been slowed by issues in the historic buildings. The project combines the Cornelius Hotel, built in 1908, and the Woodlark Building, an office and retail building built in 1912.

“It would be a lot easier if it were ground-up (construction), but that’s not what we do,” Wali said.

The Woodlark is now on track to open in spring 2018. The hotel will offer 150 rooms and an East Texas-meets-Portland restaurant from Doug Adams, the chef at the well-regarded Imperial restaurant in Provenance’s Hotel Lucia. Another bar is also planned.

Dossier will relaunch in August with 205 rooms.

Hotel developers are focused anew on drawing in customers with attractive lobbies, restaurants and other ground-floor amenities as distinguishable features.

“I can’t tell you that the guest room at my hotel is better than the guest room at the Hampton Inn,” Wali said. “Everybody has a comfortable bed and great Wi-Fi and a great shower. We think what really creates the experience now is it’s all about the public spaces, the social spaces, the restaurant, the bar. We’re spending a lot of money, focus and effort on those to give a true Portland experience, elevated.”

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A new boutique hotel opened last month in downtown Portland at the corner of Southwest Third Avenue and Taylor Street. The 13-story AC Hotel Portland Downtown was built on a vacant quarter-block site by design-build contractor and developer Mortenson, and SERA Architects served as the designer of the building and interiors. The $50 million project includes 204 guest rooms, a bar/lounge area, European-style breakfast kitchen and dining room, a Water Avenue Coffee bar, fitness center, and business and meeting rooms.

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One of the challenges in building a hotel is the larger-than-usual number of interested parties. In the case of the AC Hotel Portland at 888 S.W. Third Ave., at least five groups have a stake in the $50 million design-build project:

• Design-build contractor Mortenson had the initial idea to build a hotel at the site, and has had its designers involved from the earliest stages.
• Marriott International owns the AC Hotel line. Marriott is partnering with Sage Hospitality for development of this and two other U.S.-based AC Hotels.
• Developer McWhinney, out of Denver, has invested considerable capital.
• And because the Portland Development Commission sold the land for the project at a premium, it has set targets for minority participation and sustainability.

“You do end up with a lot of opinions,” he said. “But they all wanted this one to stand out and be a different kind of hotel than the standard traveler.”

A long-term hold

The full quarter-block lot at the corner of Southwest Third Avenue and Taylor Street had been grass for two and a half decades before the PDC’s board voted in 2014 to sell it to Mortenson for $2.5 million. The Minnesota-based builder has a large Seattle office and a growing Portland one.

The new hotel has been identified by Sage and Marriott as a long-term investment.

“The targeted cycle is 20 years,” Ervan said.

Sage already operates two successful downtown hotels. The AC will feature its art program and kitchen services by its Sage Restaurant Group. The kitchen will serve a range of tapas plates, in keeping with the Spanish theme.

There are 204 guest rooms and 1,600 feet of public meeting space. The structure is post-tension concrete with minor steel inside the elevator core. The exterior is white brick with some composite metal panels. The brick was insisted on by the Portland Design Commission, Ervan said.

Mortenson has a complete mock-up of an AC room in its temporary office on Southwest Third Avenue. This practice helps in testing out minor tweaks to the finishes, and in informing new tradespeople as they arrive on site.

“Any time you have a repeat of hundreds of the same situation, a full mock-up is very beneficial,” Ervan said. “The Marriott flag requires it, and it’s become kind of an industry standard in hospitality, and a little bit in health care.”

Design details

There are five room plans, though they all feature the same neutral colors and sleek, legless furniture (the pieces do have tiny, hidden legs, Sage spokeswoman Amber Evans said). Mostly the rooms differ by sleeping arrangement. Each floor has a “corner king” unit, located along the white, storefront lantern pattern along the southwest-face corner – each with a distinctive 180-degree view.

Rooms will be priced according to the usual factors, with view chief among them. Other price-affecting forces include the time of year and vacancy around town. Rates for an average room at the AC Hotel will probably run between $150 and $250, Evans said.

Much design mojo has gone into selecting lighting and earthy, complementary tones as well as features to meet Leadership in Energy & Environmental Design silver standards. The units have deep-dark laminate, vinyl-plate flooring – floated for soundproofing. The vinyl covering that coats the concrete walls – made of recycled materials – aids with sound capture, as well as by contributing LEED points. Other soundproofing measures include sound board in the bathrooms. Most of the rooms also have double-layered drywall with an acoustical channel running between the two, pulling drywall away from the studs to form a kind of false wall.

The industry standard soundproofing rating (STC) for rooms is 45-50. Here, the team is working toward a rating of 58, the standard for Sage Hospitality (Marriott’s acceptable STC score for rooms is 52).

Quietude is very important to travelers, Evans said. Lack of it is consistently ranked as one of the biggest complaints at hotels. The view is critical too, as is wireless Internet.

“Anything above the eighth (story) has a phenomenal view,” Evans said. “The east-facing rooms have a phenomenal view of the Willamette River and Mount Hood. The west-facing have great views of the city.”

To fit a professional aesthetic, coloring on the three art pieces that will adorn the rooms – procured from local artists via Instagram – has been dulled somewhat. Evans said the hotel is targeting the “entrepreneurial, spirited younger traveler who has an appreciation for finer things.”

The 13 stories bump right into the allowed setbacks and all five adjoining buildings. The height of 130 feet is about all that’s allowed for the site under Portland’s height restrictions, which drastically decrease heading toward the Willamette River, starting about at the site.

The hotel is basically like any other AC Hotel around the world. But the lobby as well as the public and meeting spaces are where the interior designers attempted to bring in elements of Portland, Evans said.

“We don’t want people to go through the hotel – we want people to come to the hotel,” she said.

Room boom

The project is part of a hospitality boom in Portland.

Notable other hotel projects at various stages of development include the Hyatt Regency at the Oregon Convention Center, the Cornelius-Woodlark in downtown, the Canopy by Hilton, the Porter Hotel Curio at Southwest Second Avenue and Jefferson Street, the Hi-Lo Hotel at the former Oregon Pioneer Building, the Grove Hotel on Burnside Street, the Hampton Inn and Suites in the Pearl District, Hotel Chamberlin on Southeast Grand Avenue, the addition at the Northwest Portland Hostel, the Toyoko Inn at Third Avenue and Oak Street, and the expansion of the Jupiter Hotel.

Mortenson is also developing a hotel at the United Way site in downtown.

Mortenson hopes to hand over a fully-functional building by Christmas – everything down to the sheets on the bed. The hotel operations team should begin training employees, establishing networks in the building and adding furniture and dishes, etc. While other projects around downtown have languished as a result of the construction labor shortage, material delays and other issues, a tower crane at the AC Hotel has gone up and come down.

Despite the team’s consistent pace, Ervan thinks the project could have moved faster.

“It’s definitely been difficult,” he said. “It’s been the labor shortage, as much as the project size from a floorplate standpoint; both have been constraints to how fast we go. But also through the cash flow, as it’s drawn out, we’ve had to close out parts of the project. That’s important too.”

AC Hotel Portland

Address: 888 S.W. Third Ave.

Size: 120,000 square feet

Cost: $50 million

Owner: Marriott International

Construction start date: September 2015

Scheduled open date: Jan. 23, 2017

Design-builder: Mortenson Construction

Construction architect: SERA Architects

Key subcontractors: KPFF Engineering (structural), Cochran Inc. (electrical), TCM Corp. (mechanical)

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The Port of Vancouver USA on Tuesday named Vesta Hospitality the preferred developer for the port’s Terminal 1 property.

Vesta Hospitality President and CEO Rick Takach Jr. said he plans to build a 150-room AC Hotel by Marriott. Takach said his successful bid benefited from the inclusion of Marriott, architecture firm DLR Group and construction firm Deacon Corp.

“I’m bringing a very experienced team to the table at this point,” he said. “We worked very, very hard to put our best foot forward.”

Also, the port has chosen Holland Partner Group to serve as the master developer of a mixed-use complex at Terminal 1. The firm has developed several projects in Hillsboro and Wilsonville, and has also developed projects in Seattle’s South Lake Union neighborhood, and in Los Angeles, San Diego and Denver.

The mixed-use project at Terminal 1 could include office, retail and residential space. The port and the developers will refine a comprehensive development plan with the goal of breaking ground in mid-2017, said Katy Brooks, the port’s economic development director.

“It’s a very aggressive timeline, but that’s what we’re shooting for,” she said.

Takach cautioned that a long-term land lease still must be negotiated and a final vote by port commissioners must take place. But he said port officials and Vesta share a common vision.

“My expectation is that we will be able to get this done without too much of a problem, because everybody’s on the same page,” he said.

Takach is a longtime Vancouver developer. Vesta also owns the Homewood Suites by Hilton, which opened along the Columbia River in 1997. Takach said his local experience gave him an edge in the bidding.

“They’re looking for someone that could be available,” he said. “We’re obviously very available – I can see the site from my office.”

The Terminal 1 site is near a former Red Lion hotel on the Columbia River. A portion of the structure is being converted into the Columbia River Life Sciences Building – a planned hub for biotech companies. AbSci has signed a lease agreement, and will move in soon, said Abbi Russell, communications manager for the port.

Takach said he has invested in the Homewood Suites property and its employees over the years, and that he plans to do the same with the AC Hotel.

“This is not a buy and flip for me,” he said. “This is a long-term hold.”

Construction of the AC Hotel is expected to cost $25 million to $30 million, Takach said. A rooftop deck is being considered for the European-inspired hotel.

The AC Hotel will have some meeting space, but Takach said he’s not trying to take business from Vancouver’s existing hotels.

“We’re not going to build so much meeting space that we’re trying to compete,” he said. “We just want to build enough that we could do some high-end corporate meetings.”

Separately, Takach closed Tuesday on a purchase of the 148-room Best Western Agate Beach Inn in Newport. He declined to reveal the purchase price, but said he plans to invest about $6.5 million in improvements.

“It could be a little jewel,” he said.

The plan is to renovate guest rooms, the lobby, the exterior, and food and beverage operations. Takach said he would rely on Texas-based Plantés Hotel Renovation Inc. for the project.

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The headquarters hotel planned near the Oregon Convention Center is one of many either in development or under construction in the Portland-metro area.

Competing hotel developers said at an industry forum Thursday that they support the proposed 600-room Hyatt hotel near the Oregon Convention Center.

Homer Williams, chairman of Williams & Dame, said the hotel could help revitalize the Lloyd District.

“If they do a good job at the street level, it will be additive” to the neighborhood, he said. “If not, it will be an island.”

The Hyatt project has attracted critics, most prominently hotelier Gordon Sondland, who objected to Metro’s role. Metro plans to issue $60 million in bonds to support construction of the $212 million project; they will be repaid by lodgers’ tax revenues.

Sondland and Metro officials announced Friday that they have reached a legal settlement to dismiss pending lawsuits challenging the project, and to avoid future legal action.

The agreement clears the way for construction of the Hyatt Regency to begin later this year. It’s expected to open in 2018.

Kimo Bertram, the San Francisco-based vice president of development for Hyatt, said the project is supported by “three pillars” – a strong base of corporate business travelers, positive expectations for the Oregon Convention Center and a steady supply of leisure travelers looking for “Portland authenticity.”

The comments came at a breakfast hosted by NAIOP, a commercial real estate development association, at the Multnomah Athletic Club.

Minneapolis-based Mortenson Construction is the builder for the headquarters hotel, as the project is known. Mortenson also is developing the AC Hotel Portland at Southwest Third Avenue and Taylor Street, and a 15-story hotel at 619 S.W. 11th Ave.

Nate Gundrum, Mortenson’s director of real estate development, said the company isn’t concerned that the rush of development will exceed demand.

“We’re not afraid of new supply,” he said.

The Hyatt is only one of many hotel projects slated for construction this year. High occupancy rates and strong revenues are encouraging new development.

Portland hotels enjoyed approximately 80 percent occupancy and $200 average room rates in 2015, exceeding the national averages of 65 percent occupancy and $125 room rates, said Kasia Russell, managing director for HVS Consulting and Valuation in Portland.

Demand was even stronger in summer, when local occupancy rates push up to 95 percent, she said.

While downtown is the hottest market for hotel developers, Washington County is also attracting interest. Russell said she’s tracking 12 projects there that would total 900 rooms.

That wave will be the first new hotel inventory for the southwest suburban county since 2006, Russell said.

“That’s where we see all the employment growth and the residential growth, so it makes sense that’s where we see hotels coming online,” she said.

Developers also discussed what they see as a high cost to win approval for Portland projects. Gundrum said it cost $2 million to move forward with AC Hotel Portland, while a similar project in Minneapolis incurred only $800,000 in predevelopment costs.

“The influence of neighborhood groups and the Design Commission (in Portland) is pretty high,” Gundrum said.

Williams, a prominent developer of the South Waterfront District and the Pearl District, said developing in Portland is worth the price tag.

“It’s a price most developers are willing to pay,” he said. “The bigger issue might be time.”

Hotel development also tends to be more volatile and prone to cyclical downturns than are the residential and commercial sectors, said William Balinbin, vice president of acquisitions at Denver’s Sage Hospitality.

“The moment there is a disaster somewhere in the world, the moment there is a terrorist attack, we are empty,” he said. “And it hurts.”

Several participants said too few new hotel rooms will come online this year to significantly affect room rates and occupancy. The developers and analysts said the hotels under development won’t change the market dynamics until 2017 or ’18.

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While tower cranes aren’t unusual to spot on the Portland skyline these days, the one that rose last month for the project on the corner of Southwest Third Avenue and Taylor Street held special meaning for Jeff Madden’s five-year-old son.

“He’s been waiting for it,” said Madden, who serves as general manager of Mortenson Construction‘s Portland office.

The crane that Madden’s son had been eagerly awaiting was erected a few weeks ago to start vertical construction of an AC Hotel by Marriott in downtown Portland. Mortenson Development is the project developer and Mortenson Construction is serving as general contractor for the 120,000-square-foot hotel, which is slated for completion in December 2016.

With an eye toward creating a memorable holiday moment highlight the crane’s erection, the hotel project team, which includes SERA Architects as the project designer, arranged a small holiday party. Kids and other family members were outfitted in safety gear, including miniature safety vests for the little ones. The group then gathered in an area across the street from the construction site, where they could watch the crane come together.

What the small group didn’t see was the planning that had to go into place in order to situate the crane as well as coordinate a pour of a little more than a thousand feet of concrete on what Madden calls a “postage stamp” of a job site.

Typical of so many of the project sites in downtown Portland these days, there’s no place on the corner site to build but up, which means the 204-room hotel will rise 13 stories above the ground when completed. One additional level below ground will feature meeting space, including 1,220 square feet of glass-enclosed “salon” spaces offering flexible layouts able to be reserved for use by small groups.

The AC Hotels by Marriott line is one of 19 brands contained within the Marriott hotel portfolio. The hallmark of AC Hotels is that each hotel in the line features a design unique to its location, according to SERA project manager Jon McAuley.

“(It’s) more of a custom brand,” he said. “They asked us to come up with an interior design and art package – something that would fit Portland.”

With an eye toward accommodating that request, SERA tapped into the skills of interior designer Courtney Laird.

The key to creating an experience reflecting Portland lay in using what Laird describes as a “simple, luxurious palette” – some wood, plenty of stone and neutral colors that would allow works by local artists to take center stage.

“This definitely is an art-centric hotel,” she said. “We knew that (art) was going to be an integral part of the design, so we planned strategically for large pieces.

“We knew we wanted large pieces here and here, so we created architectural spaces into the design to showcase them. It’s going to be a really great representation of local art.”

Once the hotel opens, it will be owned and operated by McWhinney and Sage Hospitality. The latter also operates The Nines Hotel, also in downtown Portland.

AC Hotel by Marriott

Project: A 204-room urban hotel designed to accommodate business and leisure travelers; Leadership in Energy & Environmental Design silver rating targeted

Specs: 120,000 square feet, 13 above-ground levels, one below-grade level

Location: Corner of Southwest Third Avenue and Taylor, Portland

Start date: December 2015

Anticipated completion date: December 2016

Developer: Mortenson Development

Hotel owner/operator: Sage Hospitality and McWhinney

Architect: SERA Architects

Engineer: KPFF Consulting Engineers

General contractor: Mortenson Construction

The post Hotel rising on tiny Portland site appeared first on Daily Journal of Commerce.

Hotel development in Portland is booming in response to rising room rates driven by the city’s surging popularity as a travel destination.

“It’s a hot market, so we latched onto it,” said Jeff Madden, general manager of Mortenson‘s Portland office.

The general contractor and developer, which opened a Portland office in 2012, has two hotel projects in the works, the Oregon Convention Center Hotel in the Lloyd District and the AC Hotel by Marriott in downtown Portland, and firm leaders are seeking more similar opportunities.

“Portland is an awesome place. It was somewhat underserved,” Madden said. “It can be virtually impossible to get a hotel room downtown. It’s just market demand. That’s why people want to develop hotels ������.”

Mortenson isn’t the only developer to pounce on the trend. The 204-room AC Hotel and 600-room Hyatt Regency Convention Center Hotel are among a slew of hospitality projects in various stages of development in Portland.

Demand for hotel rooms and rising rates in Portland have been driven by increased tourism as the city garners more national and international attention, according to commercial real estate service companies tracking the hospitality market. The city also is attracting more business travelers in part because an increasing number tech companies have opened offices in the Portland-metro area.

“People want to come here,” said Brian Resendez, a real estate broker with Sperry Van Ness who specializes in Pacific Northwest hospitality properties. “People are interested in it. We are an up-and-coming gateway city to the West Coast and a gateway city to Asia. The market is very solid for hospitality.”

Another factor encouraging more hospitality investment in Portland: Compared to other West Coast cities it’s still relatively cheap to purchase property –if you can find it– and develop a hotel in the city, said Mark Fraioli, senior vice president of the hotels and hospitality group of the commercial real estate services firm Jones Lang LaSalle.

“There’s a great deal of interest in Portland from commercial real estate investors,” he said. “Many of them find that they’re underrepresented on the West Coast. The opportunities are hard to come by for the buyers, but they’re motivated because they want the diversity of their portfolio.”

Numerous projects on the horizon

In upcoming meetings, the Portland Design Commission is set to review several new hotel projects. A hearing is scheduled on Thursday for the 299-room Porter Hotel on Southwest Jefferson Street. The project is being developed by Widewaters Hotels LLC to be part of Hilton’s Curio brand.

Two other hotels off of Northwest Ninth Avenue are scheduled to go before the Design Commission in May: the 243-room HIS Pearl Hotel being developed by the Raymond Management Company and a 150-room hotel being designed by Portland-based ZGF Architects.

Last year, design commissioners approved two projects that are currently under construction: a full renovation by the new owners of the former Red Lion Hotel on Northeast Grant Avenue into the Hotel Eastlund and the new 203-room Hyatt House hotel, being developed by Portland-based Williams & Dame Development in the South Waterfront.

Developers have also filed plans with the city of Portland to convert existing properties into hotels. This includes plans led by Portland-based Naito Development to renovate and expand the Grove Hotel building in Old Town Chinatown into a 52-room, 190-bed boutique hotel.

The 96-year-old Buck-Prager Building, a former office building Northwest Portland, could also be converted into 70-room boutique hotel, according to an early assistance intake filed with the Bureau of Development Services. Late last year, the Portland City Council rejected a proposal by Portland-based developer Gerding Edlen to demolish the building, considered a contributing structure to the Alphabet Historic District, and construct in its place an 82-unit apartment complex.

Alan Battersby, president and CEO of Grand Ventures Hotel said he was encouraged to purchase and renovate the Red Lion into Hotel Eastlund because of development that’s reshaping the Lloyd District. In particular, he said the proposed Convention Center Hotel will bring more visitors to neighboring hotels like the Hotel Eastlund.

“I wish it was going up today,” Battersby said. “What we’ve found is that until you’ve reached a saturation point by bringing in a new hotel, it’s actually better for your business. It would be very healthy for the city. The more hotels we get around the convention center, the more we can compete with other cities for convention business.”

A boutique market

Large national hoteliers have been attracted to the city mostly as an ideal market for their boutique brands, Madden said. This was the case with the AC Hotel, a joint venture between Marriott and a Spanish hotel company, he said. The 12-story boutique hotel was designed by Portland-based SERA Architects to have an upscale, European feel. This should be a good fit for the type of clientele Portland tends to attract, Madden said.

“Portland would seem to like a hotel like this, that’s a little European,” he said.

Demand from national brands to build hotels in the city that are uniquely Portland has been a boon for SERA Architects, which started designing hospitality projects less than a decade ago, principal Lisa Zangerle said. Along with the AC Hotel, the firm designed the Hyatt House and the recently completed Marriott Residence Inn in the Pearl District.

“We have just had a lot of work and it’s really expanded our portfolio quite significantly,” she said. “The projects we like to work on are urban, custom and complex. I think what we really excel at is providing that local feel to our hotels. It’s sort of infusing our touch from a design standpoint that gives it a custom feel.”

SERA designers have been so busy with hospitality work that the firm has actually had to turn away other hotel projects because it doesn’t have the capacity, Zangerle said.

“Portland, a while back, was really considered a third-tier city and now it’s a hotbed,” she said.

The post Portland’s red-hot hotel market appeared first on Daily Journal of Commerce.

A vacant lot in Southwest Portland will soon be the site of an upscale, European-style hotel.

The Portland Design Commission on Thursday unanimously approved with conditions SERA Architects‘ design for the 13-story, 204-room AC Hotel by Marriott. The 118,000-square-foot boutique hotel will be built at the corner of Southwest Third Avenue and Taylor Street on an empty lot that was long owned by the Portland Development Commission.

Commissioners reacted positively to the simplified brick and aluminum window wall facade and said it was a vast improvement from the one they critiqued last fall during a design advice request hearing for the project. As a condition of approval on Thursday, they requested a couple of revisions. This included replacing dark gray brick stripes on the facade with white brick to complement the cream-colored brick on several buildings nearby, and using glass awnings – instead of metal ones – on the ground floor.

The design team leaned on the commission’s recommendations from the fall to revamp the design of the hotel, a joint venture of Marriott and the European AC Hotel brand, SERA principal Kurt Schultz said. The revised design uses fewer materials on the facade, he told the commission. It also features at the corner of Third Avenue and Taylor Street a large oriel window that extends up that side of the building over the main entrance.

“It really creates this gateway corner that will be lit at night and really become an icon,” Schultz said.

Commissioners’ responses to the corner oriel window were mixed; they noted that the dark brick color on the facade seemed out of place with the rest of the area, which includes buildings dating from the late 1800s. They compromised by asking that the design team use a lighter brick. Along with adding context to the design, the lighter brick would make the corner window feel less detached from the rest of the building, Commissioner Tad Savinar said.

“I have a problem with the giant thing on the corner, but I think it would calm down with light brick,” he said.

Crews from general contractor and developer Mortenson Construction are scheduled to break ground on the project in July.

Also on Thursday, the commission offered feedback during a design advice hearing for the Hub at Portland, a proposed 15-story, mixed-use building at the corner of Southwest Fourth Avenue and Harrison Street. Plans call for 35,000-square-foot of retail space on the ground floor for a potential grocery store and Portland State University student housing and market-rate apartments on the upper floors.

The design team from Chicago-based Hartshorne Plunkard Architecture requested input on various options for stepping down the building massing and patterns on the facade, but commissioners said it was hard to offer advice based on the information presented. Several said they would have liked to have seen a few renderings that illustrated what the proposed building would look like in context with surrounding structures.

“We want to understand how this building fits into its place,” Savinar said. “We want a good building and we know developers have a pro forma. It’s also our job to make decisions that make sure we don’t devalue our neighborhoods. This is a very difficult package to review. It’s very difficult to make decisions about the massing until I feel like this is a building that’s in a place as opposed to outer space.”

Neighbors of the proposed project testified against the plans on Thursday. They reiterated concerns brought up at a design advice hearing last month that the development would be out of context with the rest of the neighborhood. The building would create too much shade on nearby Pettygrove Park and exacerbate traffic congestion in the area, neighbors testified.

Commissioners agreed with neighborhood concerns that the proposed development as designed would be out of place and not take advantage of being adjacent to the historic Halprin Open Space Sequence. They noted that the building massing would appear overbearing next to two pedestrian-only boulevards.

“This is kind of alone in its context,” Commission Chairman David Wark said. “You’re next to a national historic district. What we’re looking for is: How does it respond to that?”

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