$75M Government Subsidy Apparently Not Enough for Luxury Center City Hotels

Rendering courtesy of Tierney Agency

Rendering courtesy of the Tierney Agency

In 2013, Philadelphia’s City Council approved a $33 million tax-credit package to help developer Brook Lenfest build two boutique hotels on a vacant lot at 15th and Chestnut in Center City.

The deal was meant to offset the cost of the construction, which was estimated at $280 million, using something called “Tax Increment Financing.” Lenfest also secured other state and federal grants worth an additional $42 million, bringing the total public subsidy of the hotel project, which is supposed to include a W hotel and an Element hotel, to $75 million.

But apparently Lenfest, son of the former Inquirer and Daily News owner H.F. “Gerry” Lenfest, is still struggling to pull together all the money he needs. Last week, Councilman Bill Greenlee introduced a bill on behalf of Council President Darrell Clarke that would create a “Neighborhood Improvement District” on just that one property alone. That would allow the developer to secure a private loan against the value of the subsidy. Read more »

Spotted: Is That Construction Equipment at the Future W and Element Hotel Site?

photo 3

Is the construction of the 755-room W and Element Hotel about to commence on the former parking lot at 15th and Chestnut Street? It certainly looks that way.

We walked by the other day and snapped a few photos of the scene. There was some construction equipment on the site, a large hole and a prominent “Work In Progress” sign hung on the fence near the corner. It’s unclear what kind of work is being done and it seems as though mum is the word on when an official groundbreaking for the hotel will occur.

“It’s a very good indication that construction will be underway shortly, if it’s not part of the construction,” said Jack Ferguson, President and CEO of the Philadelphia Convention and Visitor’s Bureau. Ferguson, while not directly involved in the inner workings of the project, also said that he had been told it will be a 36-month project and that it’s planned to be delivered in January 2018. “We are telling our customers that the hotel will be ready in 2018.” Read more »

Morning Headlines: More Info On Planned W / Element Hotels Coming Next Week

Photo by Sandy Smith via the Philadelphia Real Estate Blog.

1441 Chestnut. Photo by Sandy Smith via the Philadelphia Real Estate Blog.

According to PlanPhilly’s Jared Brey, the developers of the planned W and Element Hotels at 15th and Chestnut (currently a parking lot) don’t need zoning variances to build their project. For this reason, their meeting with the Center City Residents Association next week, where they will present their new designs, will be for informational purposes only.

Here’s what to expect of the double tower:

According to a description shared with PlanPhilly by an attorney working on the project, the hotels will have a total of 755 rooms. There will be 295 rooms in the four-star W Hotel, and 460 rooms in the three-star, extended-stay Element by Westin. The entire hotel operation will be managed by Starwood, a Connecticut-based hospitality company.

The project will also include more than 1,700 square feet of retail space on the ground floor at the corner of 15th and Chestnut. The developer, Brook Lenfest, is seeking LEED Certification for the building.

Lenfest, if you recall, caused waves last year when he requested (and got) $33 million in tax breaks for the project.

Read more »

Update on Two Big Projects at 15th and Chestnut

The latest available rendering of Brook Lenfest's proposed dual-hotel tower, via this recent Center City District report

The latest available rendering of Brook Lenfest’s proposed dual-hotel tower, via this recent Center City District report

We’re seeing progress on two major projects that’ll radically change the intersection of 15th and Chestnut: Brook Lenfest’s long-discussed W and Element hotel tower right behind the Residences at the Ritz Carlton, and, right across 15th Street, Alterra Property Group and the Scully Company’s conversion of 150,000 square feet of class B office space into 180 apartments, with a small amount of office and retail space. (That latter project was mentioned in an Inquirer story a few days ago.)

Earlier today, we noticed that the parking lot on the hotel site was closed (temporarily, a sign said). Philly Chit Chat’s HughE Dillon explains:

This week they are beginning to test the soil in anticipation for the building as well as the extensive underground parking lot they’re building.  Last week officials from the project went around to the surrounding buildings, including the new Alterra project, and took photos of them inside an out – “The Before Photos”, just in case vibrations from the drilling and building the W causes any cracks in the neighboring buildings.

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The W Hotel Tax Break: Foolish or Defensible?

1441 chestnut street

Photo of 1441 Chestnut Street via Philadelphia Real Estate Blog

So let’s see if I’ve gotten this right: The real reason the bigger, bolder Pennsylvania Convention Center is empty much of the time and getting emptier is because we don’t have enough hotel rooms.

This comes as a total surprise to me. Here I’ve been laboring under the conventional wisdom that the center’s well publicized labor (and labor cost) problems are the main reason conventions are staying away in droves.

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Brook Lenfest Accused in W Hotel Real Estate Deal–Again

Brook J. Lenfest, scion of philantropist Gerry Lenfest and owner of the Chestnut Street site slated to be the new Starwood Element/W Hotel, is in hot water again. The 22,400-square-foot parcel was originally purchased in 2000 by Lenfest and a group others–including Mariner Chestnut Partners L.P.–for $11.15 million. Plans (Waldorf Astoria, anyone?) ensued and tanked and were pitched and ditched. Litigation has been endless.

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