The midcentury Southwestern Bell building in downtown Houston will get new life as a 150-room Hyatt Place Hotel.
The development group, including Anthony Patel and Nick Patel of Pride Management, has obtained a $22.8 million loan for the long-vacant building from Dallas-based Hall Structured Finance, the companies announced. Renovation of the 16-story high-rise is targeted for completion by March 2019.
The first-lien construction loan, which closed after Hurricane Harvey and represents a portion of the development costs, will jump start the project.
"We are extremely excited to be part of the continued revitalization of downtown Houston and to have the opportunity to bring a vacant historic building back to life," Pride Management co-owner Nick Patel said in an announcement.
The late-moderne-style building, added by Houston developer Jesse Jones in 1950 to expand Southwestern Bell's Capitol Street offices, is at 1114 Texas Ave. The 1121 Capitol building, owned by successor company AT&T, is not part of the renovation.
The building sits between the 22-story Magnolia Hotel and 10-story Keystone Lofts five blocks west of Minute Maid Park. The Magnolia Hotel converted the former Post-Dispatch building into a 314-room hotel in 2003.
Rooms at the Hyatt Place Hotel project, between Fannin and San Jacinto, will be on floors 3 through 16 and average more than 400 square feet each, according to Hall Structured Finance. Plans call for a dining area on the ground floor, a rooftop cocktail bar, a pool and fitness center in the basement, and 800 square feet of meeting space on the second floor.
The downtown hotel market has grown to about 7,800 rooms, with about 70 percent of them built since 2001, according to the Downtown District.
"What you've got downtown is an increasingly attractive live-work-play type environment, with more residential units, more office space, more event venues," Hall Structured Finance senior vice president Matt Mitchell said.
"Our site is walkable to three major sporting venues and one of the largest convention centers in the country, as well as all the businesses downtown."
Hall Structured Finance has financed several projects in Houston, including Hotel Indigo near the Galleria, and seeks more deals in the future. The company has developed a niche in hotels, which are often overlooked by banks and institutional groups who like the long-term leases associated with office and industrial properties.
"You're basically underwriting based on daily rental agreements," Mitchell said.
"We have a very positive opinion of Houston over the long term."
The project team includes Excel Enterprise as general contractor and Alecha Architecture of New Orleans. Interior demolition work began this week.
The Hyatt Place Hotel development represents the latest downtown building to be converted to hospitality use.
The 255-room Le Meridien Houston Downtown recently opened in the midcentury Melrose Building at 1121 Walker. NewcrestImage plans to develop a 195-room AC Hotel by Marriott in a century old building at 723 Main.
Other redevelopments include the 168-room Aloft Houston Downtown in the 1913 Stowers Furniture building, and the 328-room JW Marriott Houston Downtown at 806 Main.
Choice Hotels, which has been expanding Cambria-branded hotels, last year purchased the art-deco style Great Southwest Building at 1314 Texas with plans to redevelop it as a Cambria hotel.
In new developments, Midway and Valencia Group recently opened Hotel Alessandra, a 21-story, 223-room boutique hotel at 1070 Dallas in Greenstreet. Last year, the 29-story Marriott Marquis added 1,000-rooms to the market.
Pride Management will manage the Hyatt Place hotel. The Beaumont-based company operates hotels in Texas and Louisiana and manages six hotels in Houston....Read more