Closing in on a deal for a local Waldorf in Downtown Sarasota

Proscenium builder is poised to make $1 billion announcement next week
By KEVIN L. McQUAID, Roger Drouin and Michael Pollick – STAFF WRITERS
Sarasota Herald Tribune
Published Friday, Feb. 22, 2008 at 4:30 a.m.

SARASOTA — Lion’s Gate Development Group Inc. is expected to announce early next week that it has finalized a deal to bring a Waldorf-Astoria Hotel to its Proscenium project planned for downtown Sarasota.
Gary Moyer, Lion’s Gate president, declined to comment on next week’s planned disclosure. He said he believes traffic that the mixed-use project would create could be worked out. The project is to be built on U.S. 41 from Fourth Street to Boulevard of the Arts.
If an announcement regarding the iconic, five-star hotel is forthcoming Monday or Tuesday, as anticipated, it will mark the latest tangible sign that the proposed $1 billion project is moving forward — despite the region’s depressed real estate conditions.
Gary Moyer, Lion’s Gate’s president, declined to comment on the specifics of next week’s planned disclosure.
“We hope we’ll be making a big announcement next week,” Moyer said Thursday. “Other than that, I can’t say anything at this time.”
Moyer said last May that Waldorf-Astoria owner Hilton Hotels Co., which intends to develop several Waldorf-Astoria properties throughout North America, had signed a tentative deal to bring the famed brand to Sarasota.
But while Lion’s Gate and Hilton appear to have reached agreement, the luxury hotel-anchored development at 400 N. Tamiami Trail still faces considerable economic and market hurdles before construction could begin this summer.
Final city approvals, too, may be hard for Lion’s Gate to get from a City Commission in which a majority seems bent on curbing growth.
City officials in particular are expected to scrutinize the hundreds of new daily car trips along U.S. 41 that the seven-acre project — a mix of office and retail space, condominiums, hotel rooms, entertainment space and parking — would add to an already busy roadway.
“That is why we need at this point to have an assessment of U.S. 41 and the way that roadway can handle all these projects,” said Sarasota Vice Mayor Kelly Kirschner, adding the Proscenium could create “an incredible hub of activity.”
“Certainly that will be difficult,” said Kirschner, who was elected in March 2007 on a platform that pushed slow growth.
Mayor Lou Ann Palmer said: “I would love to see it happen. But on the other hand, we have to go through the process. There are a lot of things to look at.”
Moyer said Thursday that Proscenium “doesn’t have any issues we believe can’t be resolved in regards to traffic.”
City officials are expected to further review the project on March 5, when Sarasota’s Development Review Committee meets.
If the committee approves it, Proscenium will also have to meet Planning and Redevelopment Department requirements and receive permission from the commission for street vacations.
A Hilton spokeswoman declined to comment on Waldorf-Astoria in Sarasota or any pending announcement.
“Unfortunately, until the deal is done, we cannot comment on anything that is pending,” said Lisa Cole, director of communications for the hotel company’s southeast region.
If the hotel reaches fruition, it will become only the second Waldorf-Astoria in Florida, joining a property under construction in Bonnet Creek, near Orlando.
Another five Waldorf-Astoria hotels are planned, in Maui, Hawaii; Phoenix; La Quinta, Calif.; Jeddah, Saudi Arabia; and Beverly Hills, Calif.
The hotel’s arrival would beg the question of whether Southwest Florida — despite a reputation as a tony enclave — represents a deep enough market to support a 266-room Ritz-Carlton and a 225-room Waldorf-Astoria, two five-star hotels that would compete directly with each other.
Virginia Haley, president of the Sarasota Convention and Visitors Bureau, contends that rather than cannibalize one another, a trio of upscale hotels comprising the two five-star properties and the Hyatt Sarasota would “give us real penetration into that whole upper-end luxury hotel market.”
“You will have two neighboring luxury-end properties, which allows us to steal market share from other communities,” Haley said.
When the plans were announced for the Ritz-Carlton, some observers were worried about what it would mean for the nearby Hyatt, Haley said.
The answer, it turned out, was the ultimate upgrading of the Hyatt into a Hyatt Regency, which is occurring in connection with $20 million in renovations.
But other questions, beyond whether the hotel itself would be a success, abound. Specifically, the Proscenium’s economics have puzzled development experts since the project came to light early last year.
In addition to the luxury hotel, where rooms would likely rent from $400 a night, the project would contain more than 200 condos priced from $1 million.
It would also include 240,000 square feet of office space — as much as some of the city’s largest towers — commanding per-square-foot prices well above existing rates. Some 130,000 square feet of planned upscale retail space also would be priced well above market.
The 18-story project also would contain some 1,600 seats of entertainment space — an 800-seat, off-Broadway style arts theater, a 300-seat jazz club and another 500-seat venue — that would generate little overall income. Proscenium would also be required to build 2,000 parking spaces to meet city codes.
Last autumn, Moyer said that the mix of uses would boost the profitability of the overall project, which is to be built on U.S. 41 from Fourth Street to Boulevard of the Arts.
“Because of the hotel, we’re able to sell residences,” Moyer said last October. Because the condos will be branded with the hotel, “we’ll be able to get more money from them, and the entire project will offer more services and have more cachet,” he said.
Lion’s Gate has said it hopes to complete Proscenium in 2011.