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May 10, 2021

Trendy NYC buyer eyes shuttered downtown hotel

Real Estate Editor

Photo by Brian Miller/historic photo from DJC files [enlarge]
Better days may lie ahead for the well-located but dowdy old hotel, pictured this spring and circa 1928.

The almost century-old Hotel Seattle, at 315 Seneca St., and its basement dive bar, Bernard's on Seneca, closed in March of last year, owing to the pandemic. Kidder Mathews recently put the 78-room property on the market, unpriced, with offers due by April 20. No sale had been recorded by deadline Friday.

Now there's a new renovation plan filed by Graham Baba Architects on behalf of prospective buyer HM Emerald City LLC, which shares a New York address with ASH NYC, a developer and design firm. ASH has acquired at least three old buildings to date, then renovated them as trendy boutique hotels. Past projects, including apartments, have been in partnerships with LLCs sharing the root name HM Ventures Group.

ASH didn't respond to a DJC query. The firm's ASH Staging arm is helping to market the remaining units at the Emerald condominium tower downtown, so it's not unfamiliar with our market.

The hotel, between Fourth and Third avenues, has 36,240 square feet on an only 3,600-square-foot lot. Graham Baba's early project description is minimal: “Refurbishment of an existing 11-story hotel. No change of use proposed. Interior renovations on all floors. Some updates to the building's exterior facade.”

Certainly, the building needs a makeover. And the timing may be right for a multi-month renovation job — as opposed to new, years-long hotel construction — as the possibility of post-pandemic travel begins to appear on the horizon.

The hotel last traded circa 1977 for an unknown amount to the local Neyhart family. Its brokers at KM are Dylan Simon, Jerrid Anderson and Brandon Lawler. Their listing says the property is now under contract. It appears to be entirely vacant above the retail level, where a nail salon still operates. The main entry has been boarded up for months.

Developed in 1926 as the Continental Hotel, it later became the Earl Hotel and, following a 1961 sale, the Heart of Seattle Hotel. The current name apparently came when the family bought the property.

The concrete and steel structure was developed by Stephan Berg and designed by B. Dudley Stuart (both immigrants) with Arthur Wheatley, according to city records. The generally art deco-style design was altered circa 1962 — just in time for the Seattle World's Fair — with four concrete canopies at the entry. The C-for-Continental medallions are still visible above that unsightly alteration.

KM says the hotel once operated as a sister to the Edgewater, which opened in 1962 as the Camelot. City records agree. Hotel Seattle was also once home to a Buddy Squirrel's Nut Shop.

ASH Hotels and partners previously acquired and stylishly renovated old buildings in New Orleans, Detroit and Providence, Rhode Island. ASH was founded by Ari S. Heckman and Jonathan Minkoff. Former Starwood Hotels executive Anthony Pellegrino leads its hospitality arm.

How bad is the late-pandemic hotel market right now, and where is it trending? Kidder Mathews' fourth quarter report said that, year over year, occupancy was down 45%, and revenue per available room (RevPar) fell by 56%. Its analyst wrote, “There are no words that adequately convey the devastating impact of the 2020 pandemic on the local lodging market. The shock to the industry was not merely unanticipated or unprecedented. It was unimaginable.”

However, KM thinks that better days may lie ahead. It states, “Assuming that the new vaccines prove effective, we are projecting full recovery in lodging demand by 2022 in most rural and resort markets, by 2023 in most suburban markets, and by 2024 in major urban markets.”

The latter, downtown Seattle, is where at least six new hotels are in various stages of planning and permitting. Only the Pioneer Square Hotel addition project and, across the street, new citizenM are now under construction. In the three-county region, KM estimates that eight hotels are now underway.

For its part, CBRE just issued a new hotel report saying that Seattle occupancy hovered around 34% for all of last year. (Remember that travel didn't fully shut down until March or so.) CBRE now expects that figure to rise to 44% this year, then by 2025 gradually tick up to 73% — about where the market stood in 2019.

Most analysts expect leisure travel to rebound more swiftly than large-block business and convention travel; it's the latter that fills large hotels like the new Hyatt Regency. So smaller boutique operations may rebound faster — examples there include the Palihotel and State Hotel downtown, and new/renovated Lodge at St. Edward State Park in Kenmore.

If ASH closes on the old Hotel Seattle, it would be in that same niche; and it's a few steps from a light rail station.

At a national level, said CBRE's Julie Purnell, “We expect hotels and drive-to destination resort areas catering to leisure travelers to continue to see the fastest gains in occupancy. We anticipate business travel to pick up in the latter half of the year, benefiting urban and suburban upper-priced properties.”

CBRE's Rachael Rothman added, “We are beginning to see green shoots of a recovery in air travel data, booking patterns, and revenue per available room.”


Brian Miller can be reached by email at brian.miller@djc.com or by phone at (206) 219-6517.

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