West Palm hotels race rocky credit markets

Plans are in the works for four new hotels in downtown West Palm Beach, which now only has one.
But the credit crisis, which has stalled hotel building throughout the country, has put three of the projects in question, local real estate pros say.

Hyatt Place West Palm Beach, on Lakeview Avenue in the heart of downtown, is mostly built. The 165-room hotel is scheduled to open in March.

“The Hyatt is probably OK, because it is the first one to be completed and the closest to CityPlace,” a bustling mixed use downtown development, says Neil Merin, chairman of brokerage NAI Merin Hunter Codman. “It is well located for business travelers, as it’s near the major downtown office buildings, and Hyatt is a good flag.”

But backers of the remaining projects may find current financing conditions too expensive. Developer NCP Investments of Chicago plans a Marriott Renaissance Hotel at the historic Comeau building on Clematis Street and an Aloft by Starwood in the Southern Bell building on Fern Street. The 150-room Aloft is scheduled to open in late 2009, while the 162-room Renaissance doesn’t yet have a completion date.

West Palm Beach Hotel Group of Boca Raton plans a 170-room Marriott Residence Inn at the corner of Hibiscus and Quadrille to open in 2010.

Neither developer returned calls to discuss financing, and experts say it’s unclear the developers will be able to come up with the money. “There is clearly a need for hotel product downtown,” says Jonathan Cameron-Hayes, president of Florida Realty Investments, a developer/investor. “But I think there’s a lot of difficulty in making those projects happen in the current capital market situation.”

Merin questions whether there’s really a need for 600-plus hotel rooms, even beyond the recession. “The need now is on a seasonal basis for weekend events like the boat show and marathon,” he says. “There aren’t enough offices downtown to create year-round demand.”