Hotel development booms in Delray Beach

Miami /
Jan.January 15, 2016 12:00 PM

Delray Beach, known for its upscale restaurants and small shops along Atlantic Avenue, is seeing growth in its hotel sector, specifically of the hip, urban boutique variety.

Samar Hospitality, a Jericho, New York hotel developer, has approval for a 122-room Aloft hotel at 202 Southeast Fifth Avenue. The hotel is part of a mixed-use project that includes 35 condos, 6,280 square feet of retail space and structured parking. Alan Mindel, managing member of Samar, told The Real Deal he hopes the hotel will open in 2018.

Meanwhile, Hudson Holdings of Delray Beach, which specializes in historic redevelopment, has pre-approval plans for a 130-room Hilton Canopy at the corner of Southeast First Avenue and Southeast First Street across the street from historic Sundy House, which Hudson already owns. This project too includes retail and residential space.

Both developers cite the strength of the Delray hotel market as a major factor in their plans. The occupancy rate for hotels in the Boca Raton area, including Delray Beach, averaged 72 percent for the first 11 months of 2015, up from 70.5 percent in the same period of 2014, according to travel research firm STR Inc. The average daily room rate totaled $160.94, up 7 percent. “There’s a huge demand for additional rooms,” Steve Michael, co-founder of Hudson Holdings, told TRD.

The last two hotels completed in Delray Beach were a 95-room Fairfield Inn & Suites at 910 West Atlantic Avenue, which opened last February, and a 134-room Hyatt Place at 104 Northeast Second Avenue, which opened in July 2012.

Mindel said he was particularly impressed with the Hyatt Place, which influenced Samar’s decision to plunge into Delray Beach — its first venture outside New York. “That’s probably the best executed Hyatt Place, I’ve ever seen,” he said. Hyatt Place also bills itself as funky and hip.

Both developers see plenty of opportunities to draw business and leisure travelers.

“It has a 21st century approach to the way a village should be set up,” Mindel said. “It’s a pedestrian community with a lot to do and easy access to office space.”

Mindel thinks Aloft can attract sports teams and other event-based guests. And Michael envisions Canopy becoming a destination for high-end corporate events, competing with the Breakers in Palm Beach and The Boca Raton Resort. “Those people want a hotel with vibrancy around it,” he said. And Delray provides more of that than Boca and Palm Beach, he maintains.

“As long as cheap capital is looking for a place to deploy, Delray Beach is on the radar for a lot of developers and asset classes,” Delray Mayor Cary Glickstein, founder of Delray-based developer Ironwood Properties, told TRD. But, “whether the demand is there, I’m not sure,” he said. “I’m not hearing that hotels are oversold.”

 

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