NATIONAL REPORT— For as pervasive as mixed-use development has become, particularly at the industry’s upper upscale and luxury tiers, it’s a mistake to assume all such projects share a recognizable profile. The first differentiator for many of these ongoing projects— either in construction or on the drawing baord— is the mix of components. While some projects combine office and/or retail with lodging, in the majority of cases today, the major components are lodging and residential. Yet even within the hotel/residential sphere, owners and developers have an increasingly wide range of “variations on a theme” in the works. Mixed-use lodging/residential types include pure condominiums, fractional ownership units, and condo-hotel units, sometimes all three in the same project. Resort destinations are especially popular, but the number of downtown projects is growing significantly as well. Developers continue to be attracted by hese projects’ financing advantages and by demand for the residences on the part of high-net worth consumers. These include international buyers enjoying the benefits of the weak U.S. dollar as well as aging baby boomers looking for a second, third, or possibly retirement home, among others. Demand certainly varies market by market. But even with the slowdown in regular residential condominium sales in the current credit crunch, sales of units attached to hotel and resort developments—with their lure of access to hotel services— are proving more resistant. This is especially true when the project carries what’s considered a “premium” hotel brand. These units, according to Ritz-Carlton Hotel Co. president/COO Simon Cooper, typically can sell for 25% to 40% more than comparable units in non-premium branded projects in the same market. Just how widespread is mixed-use development from the brand’s perspective? At Ritz-Carlton, for example, all five new and announced hotels in North America— in Dallas; Rancho Mirage, CA; Los Angeles; Cap Cana, Dominican Republic; and Toronto— include residential. At IHG, 50% to 60% of new InterContinental Hotels in the new development pipeline and potential deal log qualify. For the first time, industry powerhouse The Blackstone Group has entered the mixed-use arena with new construction at the Boca Raton Resort & Club in Boca Raton, FL. Blackstone affiliates are constructing the 42-unit One Thousand Ocean condominium on the grounds of the resort, which is managed as part of LXR Luxury Resorts & Hotels. “The opportunity to own contemporary, newly-built homes and at the same time have access to the services at a classic resort like Boca Raton has proven very persuasive to buyers,” said LXR vp Anne Hersley-Hankins. In the hot New York market, current mixed-use developments run the gamut from the high-visibility conversion of The Plaza Hotel in midtown, facing Central Park, into a hotel/condo hotel/pure condominium development to a much smaller project, the 100-room Smyth Hotel, currently under construction in the hip downtown Tribeca neighborhood. When the project is completed next spring, the top floors of the 13-story building will include 15 one- and two-bedroom wholly owned condominiums. The Smyth Upstairs’ developers are Tribeca Associates, LLC, Walton Street Capital, and the Thompson Hotel Group. “This is Thompson’s first mixed-use development, so it’s an exciting way for us to extend our brand,” said Thompson co-owner Stephen Brandman. “We’ve worked hard to create a special ambience and service profile at our hotels in New York and California— to the point that our guests tell us they’d like to live in an environment like that. They’ll now have just that opportunity.” The power of premium hotel brands in getting mixed-use developments off the ground was evident in new projects that will fly the Four Seasons and Loews Hotels flags in Denver and Atlanta, respectively. In Denver, 1111 Tower, LLC is developing the Four Seasons Hotel & Private Residences, compri
