Page 16 —
COLORADO REAL ESTATE JOURNAL
— June 15-July 5, 2016
Hotel
by Jill Jamieson-Nichols
The hotel industry started to
cool in the first quarter, but that’s
not alarming considering how hot
it was last year.
Hotel occupancies and rates hit
record levels nationally in 2015,
and Denver was no exception,
according to Alison Hoyt, senior
project manager with STR, who
spoke at a recent Hotel & Resort
Summit & Expo put on by Otten
Johnson Robinson Neff & Ragon-
etti and the Colorado Real Estate
Journal.
“You can’t have record growth
in rates and occupancy all the
time,” commented Mark Dar-
rington, senior vice president of
CBRE Hotels/Capital Markets.
The Mile High City last year
saw “tremendous growth” in
hotel occupancy, which now is
starting to slow.
“Denver is starting to see the
impact of new supply,” Hoyt
said. The number of hotel
rooms grew 3.3 percent in the
first quarter, more than twice the
national average. The average
rate for a hotel room in Denver
also increased, but the level of
increase is decelerating, she said.
“The industry is still growing
… but those rates are certainly
slowing,” Hoyt said, adding the
industry as a whole likely is not
headed for a repeat of the last
cycle. “A controlled landing is far
more likely for the industry than
a complete crash.”
Denver-based Sage Hospitality,
a national hotel company that
is developing hotels locally in
Denver, Boulder and Fort Collins,
plans to be “very, very cautious”
over the next 12 months, accord-
ing to Michael Everitt, Sage chief
investment officer.
But Everitt said, “Longer term,
we think Denver is as healthy
economically as any market in
the country.”
Sage is especially excited about
a full-service hotel it is develop-
ing with McWhinney in down-
town Fort Collins that it believes
will “pop through” the rate ceil-
ing in that market, he said.
“Fort Collins is definitely on
our list as well,” said Mark You-
nadam, vice president of real
estate and development for
Hyatt Hotels Corp., who alsowas
among investors who spoke at
the hotel summit.
“I’m pretty bullish on Colorado
Springs,” said Jeffrey Duni, vice
president of HREC Investment
Advisors, who believes there is
a “lot of upside” in that market,
given lower prices.
Nationally, hotel investors
are taking a cautious approach.
A growing number, 42 percent,
of respondents to the Lodging
Industry Investment Council’s
annual survey said they don’t
believe it’s a good time to devel-
op, while 53 percent said devel-
opment only makes sense in
select markets and product types.
The majority of survey respon-
dents said the biggest threat to
hotel investment is new supply,
according to Kyle Halbrook and
Nate Shartar of HREC Invest-
ment Advisors, who outlined the
LIIC results during the confer-
ence.
The number of hotel sales
was down in the first quarter,
as was the average price per
room, according to brokers who
spoke at the event. “We’re bump-
ing along the top of the cycle,
from our perspective,” said Dar-
rington.
“There are still a lot of good
deals out there,” added Duni. “I
think 2016will still hold up pretty
strong after a spectacular 2015.”
Hotels are increasingly looking
to create experience, particularly
to attract millennials or those
with a millennial “state of mind.”
IHG’s latest brand is EVEN
Hotels, whose amenities, menus,
etc., are focused on health and
wellness. Marriott’s Moxy Hotels
targets “extroverted, energetic”
consumers.
Joe Dreiske, director of mem-
bership development for Ascend
Hotel Collection, said a hotel that
succeeds in one market may not
work in another, which is why
its network of unique, boutique
luxury hotels generates some of
the highest average daily rates
among its asset class.
James Johnson, founding part-
ner of Denver-based Johnson
Nathan Strohe, spoke to the rise
of independent hotels, saying
half of the 12 hotels his firm has
in design and construction are
not affiliated with a brand.
“When we finally look up from
our cell phones, we want to be
someplace cool, and that’s what
independent hotels are all about,”
he said.
Other News
n
Sage Hospitality
and
McWhinney
selected The Maven
as the name for the independent
hotel they are developing with
Grand American Inc.
at the Diary
Block on the corner of 19th and
Wazee streets in Denver.
Thehotel is designed tobe a live-
ly communitygatheringplace cen-
tered around The Alley, a “micro-
district” that will run between
Blake and Wazee and house a
mix of Colorado retailers, artisans,
chefs and cocktail “crafters.”
The 172-room hotel will offer a
rotating collection of creative art
and handmade products, as well
as the adjacent Kachina South-
western Grill, a concept of Sage
Restaurant Group. There also will
be a 2,300-square-foot ballroom
with garage doors that open to
The Alley for concerts and other
events.
“Maven means a trusted expert
who seeks to pass knowledge
on. We seek to curate adventures
in Denver for our guests, begin-
ning with Denver’s exciting Dairy
Block,” said
Water Isenberg,
Sage
Hospitality president and CEO.
Saunders Construction
is the
general contractor for the Dairy
Block, which was designed by
Shears Adkins Rockmore Archi-
tects
and
Johnson Nathan Stro-
he.
Brooklyn-based
Crème
is
designing the hotel lobby.
n
The first hotel at Belmar in
Lakewood, a 135-room Hyatt
House, recently opened. The six-
story hotel features apartment-
style suites for overnight and
extended stays.
s
STR
The hotel at the Dairy Block near Denver Union Station will be called The
Maven. (See Other News)
“This development will be
far superior to anything I imag-
ined,” she said.
“It will foster even more rede-
velopment and growth activity
for our area,” Markert said.
There is about a 50,000-sf King
Soopers on the site, which is
small by today’s standards.
It will be moving into a new,
90,000-sf building, he said.
There also is a Key Bank on the
site. The bank will be incorpo-
rated into the redevelopment. A
Firestone center also has a busi-
ness on the site.
Thorn, Buz Koelbel and his
son, Carl, have developed, or
will develop, four affordable
housing communities together,
including one on the former
University of Colorado medi-
cal center at Ninth Avenue and
Colorado Boulevard in Denver,
but this is their first joint venture
for a mixed-use development.
“I did develop an office build-
ing with Walt Koelbel (the father
of Buz) in the Denver Tech
Center in 1981, but this is our
first project together that is not
affordable housing in this cycle,”
Thorn said.
The development concept plan
will serve as the basis for future
discussions on a final develop-
ment plan among the Aurora
Urban Renewal Authority, the
property owners and the pre-
ferred master developer.
AURAdoes not own the prop-
erty.
It will be a number of months
before progress on the actual site
will be visible.
The Aurora Urban Renewal
Authority must spend the next
45 days or so formalizing the
agreement with Mile High/
Koelbel. At that point, the devel-
oper will begin conversations
with Regatta Plaza’s four prop-
erty owners to determine the
final ownership structure of the
site.
This summer, Thorn’s and
Koelbel’s vision will be present-
ed as part of a community out-
reach effort before the planning
and zoning process is underway.
The public will have an oppor-
tunity to share feedback on the
project vision.
“All of us on the Mile High/
Koelbel team are excited about
working on the Regatta Plaza
opportunity with the Aurora
Urban Renewal Authority and
the city of Aurora, and we are
honored to have been selected as
the preferred master developer,”
Thorn said. “We believe that this
site represents one of the best
transit-oriented development
sites in the entire FasTracks sys-
tem, and look forward to work-
ing with AURA, the city and the
community to share our vision
for a truly dynamic mixed-use
project.”
The Regatta Plaza site is at the
northeast corner of Parker Road
and Peoria Street.
A request for qualifications
was issued last August, and the
three most qualified applicants
were invited to participate in the
request for proposals process.
“Aurora is a changing city, and
the redevelopment of Regatta
Plaza is a critical next step in that
ongoing transformation,” said
Aurora Mayor Steve Hogan.
“This is the southern entrance
to our city and a highly vis-
ible stop along the Aurora
Line/I-225 Rail.
“The redevelopment that
is to come will provide new
and vibrant housing and live-
work choices in a unique urban
environment connected to
everything.”
s
Thorn
Key Bank will be incorporated into the redevelopment of Regatta Plaza
in Aurora.
A site plan showing proposed office, retail and housing on this key
Aurora site.
An aerial view of Regatta Plaza
