Author of www.HotelLawBlog.com
11 October 2006
“What will it take to solve important problems and improve people’s lives?” That’s what businessman Paul Allen, a co-founder of Microsoft Corp., asks on the main page of his website, www.paulallen.com. Apparently, one of Allen’s answers is: “condo hotels.”
Hotel Mixed-Use/Condo Hotel: Paul Allen’s Mercer Island Project
What better proof that well-structured condo hotels are a vital part of the real estate and mixed use landscape? Consider that the largest real estate investment of Allen’s holding company, Vulcan, Inc., is a redevelopment of 60 acres in Seattle’s South Lake Union that includes a combination luxury brand hotel with retail stores capped by a three-tower condo hotel project known as the Hotel 1000. The units went on sale last month and sold out within three hours. The development, which includes valet parking, room service from five-star Pan Pacific Hotel and shopping at a Whole Foods supermarket, is aimed at the busy, highly educated residents of Seattle, many of whom know Allen’s track record.
According to Joanna Kadish, writing for this month’s Washington CEO Magazine, the Vulcan real estate sales people had never seen anything like it. The sales office opened on a dreary morning in a parking lot tent office, and they invited a few folks to stop by. The sales people were shocked. People started madly filling out reservations forms, and within 3 hours the entire three towers sold out! Now there is a waiting list of 11,000 people for other Vulcan projects, an estimated 5,000 residential units to be built over the next 10 years.
One buyer of the units, a Coldwell Banker realtor, was quoted in this month’s Washington CEO magazine as saying, “It’s Paul Allen, a fellow Mercer Islander, so I figured he’d do it right.” The realtor also says she has stayed at the Pan Pacific hotel and loves it, while the Whole Foods market “clinched it” for her. The image of going down an elevator and meeting friends for a drink has widespread appeal in this tech-savvy, business-oriented city, the story notes.
That’s why people buy into lifestyle mixed-use enhanced with hotels. That’s why hotel mixed-use is one of the hottest real estate products today. For a reminder of how to structure a viable condo-hotel, look at the blog entries of “Condo Hotels” or “Hotel Mixed-Use“. [Just click the hyperlinks or browse under “Topics” on the right side of my blog home page. Sorting by “Topics” helps order the entries by subject matter.]
Paul Allen, Donald Trump, Shaquille O’Neal and Andre Agassi . . .
Donald Trump is employing similar tactics, building condo hotel projects in large cities with busy, affluent population bases. The Trump Organization has seven projects underway right now, including one in the Soho area of Manhattan and a 90-story tower in Chicago. Trump reports that sales are going well for the Chicago project, which is expected to have more than 400 residential units and 200 condo hotel units.
Hopefully, Paul Allen and Donald Trump will be the latest in a long line of celebrity owners (see my earlier posts about Shaquille O’Neal and Andre Agassi) to bring business acumen and credibility to condo hotel projects.
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Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® — a team of 50 seasoned professionals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties located around the globe.
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Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at email@example.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.