Austin hotel development boom rolls on

Oct 7, 2013
Austin American Statesman

During the past decade, downtown Austin ushered in a wave of housing with new condominium and apartment towers. Now, a tide of hotel development is sweeping the central business district that could add more than 3,200 guest rooms during the next three years, a roughly 40 percent increase over the current downtown stock of just more than 8,000

Those numbers don’t even include the latest announcement, a project proposed by Chicago-based Magellan Development Group that could rise 35 to 50 stories with one or two hotels, plus apartments, at East Fifth and Brazos streets. And about another 1,450 rooms are in the planning stage in other parts of the Austin metro area

The Austin area hotel market is among the strongest in the nation, making it a magnet for new development, industry experts say. In downtown alone, an occupancy rate of 78 percent explains why room rents are rising and nearly a dozen new hotels are planned or under construction

“That’s phenomenally high occupancy and that’s a very strong market,” said Randy McCaslin, vice president of the Texas and Louisiana markets for PKF, a hospitality industry consulting firm. “You just don’t see a downtown market with that high of an occupancy that often. That tells you there are very few days during the year when the hotels are not full.”

Downtown, the largest project under construction is a 1,012-room JW Marriott convention hotel that will rise 34 stories at Congress Avenue between Second and Third streets

A Westin Hotel broke ground last month along East Fifth Street, the 16-story Hotel Van Zandt is under construction in the Rainey Street area and a Hotel ZaZa is due to break ground by year’s end on West Fourth Street in the Warehouse District. A $52 million project that will have a 164-room Holiday Inn Express and a 134-room Hotel Indigo, a boutique brand, is due to start in December at Red River and East Ninth streets across from Stubb’s

And then there’s the Fairmont, a premier brand that plans to make its second Texas appearance with a $350 million convention hotel that would tower 580 feet at Red River and East Cesar Chavez near the Austin Convention Center

The hotel will have 1,035 rooms — including 125 ultra-luxury Fairmont Gold rooms ; 90,000 square feet of convention center space; a sky deck with views of Lady Bird Lake and the Capitol and a 555-space underground garage

On downtown’s eastern edge, the 322-room Hotel Van Zandt — a project delayed when financing dried up during the recent economic downturn — started construction two months ago and will be open in time for the SXSW festival in 2015, said Greg Clay, chief investment officer for the developer, JMI Realty LLC. San Francisco-based Kimpton Hotels & Restaurants will manage the $90 million hotel

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