BOSTON—A year after it opened its first Godfrey hotel in Chicago, Oxford Capital Group, LLC, has focused its investment eye on the Northeast, with plans to open a second Godfrey hotel here later this year.
The 242-room hotel will be an adaptive reuse of the early 20th century Blake and Amory commercial building at 505 Washington St. in the revitalized Downtown Crossing district. It’s also the next step in laying a foundation for what the Chicago-based developer sees as a national brand in the upscale lifestyle lodging space.
Boston checked a lot of key boxes for Oxford, the lead investor in the venture, according to John Rutledge, founder/president/CEO of Oxford Capital Group, LLC, and its operating affiliate, Oxford Hotels and Resorts, LLC.
“First and foremost, Oxford is looking to make smart hotel real estate investments. We, like many, have identified certain key markets we think are compelling investment markets, [ones]that have above-average growth in RevPAR projected. Optimally, they have high rates, high occupancies, multiple demand generators and high barriers to entry,” said the executive. “We consider Boston to be one of the top three high-barrier-to-entry markets and one of the top three rate/RevPAR markets… So, we viewed Boston as one of the highly logical next markets to, number one, make a smart hotel real estate investment and, number two, to grow the Godfrey hotel footprint.”
Since acquiring the site almost three years ago, Rutledge said the Boston lodging market itself has outperformed Oxford’s projections in terms of rate, occupancy and RevPAR.
When Oxford looked at the Downtown Crossing market, Rutledge said it bridged a variety of different submarkets, tapping into demand from Boston Common and the Freedom Trail, and the financial, government and Back Bay districts. “Downtown Crossing was sort of equidistant to all of those demand generators, but it also was in an area that was rapidly transforming,” he said.
Rutledge noted, decades ago, the area was considered a prime shopping district but, over time, it experienced a downturn. A resurgence began with the development by Millennium Partners of The Ritz-Carlton Hotel and Residences and Millennium Place, as well as other projects.
“We have prided ourselves over the years in buying in transitioning areas,” said Rutledge. “We don’t necessarily have to be the pioneer, but we like to be on the early end of transitioning areas—where we can buy assets attractively and be a part of the change. We help build momentum by making a significant commitment while other people are making simultaneous commitments so that, collectively, we are building significant momentum in a given submarket.
“And, when we were underwriting this project,” he continued, “there were a number of high-rise residential projects coming in within about a five-block radius of this site, so we saw a lot of institutional investment and a lot of smart money that was making significant commitments.”
Nearby, for example, Millennium Partners also committed to redeveloping the historic Burnham Building, the site of iconic Boston department store Filene’s, which had been shuttered since 2006. It also set in motion plans to construct Millennium Tower, an adjacent mixed-use building to house three floors of retail and 442 luxury residences above.
“We saw a lot of multifamily residential development, some office development and some retail development, and we saw what we felt was a restarting of significant momentum of development and investment happening in the Downtown Crossing neighborhood,” said Rutledge. “We felt it was at a natural inflection, a tipping point, where we could be the boutique/lifestyle hotel of Downtown Crossing and be a part of that growing, successful momentum in that submarket.”
As part of the redevelopment, Oxford had the Blake and Armory building designated a landmark and placed on the National Register of Historic Places.
“As a developer, we have done a variety of historic preservation and adaptive-reuse projects, including a number of landmark buildings around the country. We are believers in great architecture and great design, and we believe whenever we can make a smart real estate investment while simultaneously transforming an elegant building that may have fallen on hard times, we like to do that,” said Rutledge, who noted designating the building a landmark also entitled the project to historic tax credits.
“The historic tax credits were an important part of how we could justify spending the money that we have spent and will spend to buy down the basis of the building, so our investment returns would be attractive enough for us to take on the risk of such a comprehensive, sort of complicated, project,” said Rutledge.
As the building’s ornate exterior is restored, the hotel’s interiors are being designed by The Gettys Group, which is creating a contemporary feel within the property in contrast to the Godfrey Boston’s facade. A portal will act as a transition between reception and the historic elevator lobby. Guestrooms will feature a color palette of grays, accented by natural walnut, and amenities will include a restaurant, coffee house, lobby bar, 24-hour fitness center, complimentary WiFi and digital technology.
At first glance, The Godfrey Boston stands in stark contrast to its Chicago sibling, a 221-room hotel built on the bones of what was once slated by other developers to be a Staybridge Suites. At 16 stories, The Godfrey in the Windy City has a behemoth look, an architectural complement to the trendy River North district where it is located. Its Cubist-influenced, industrial-block facade was designed by Chicago-based firm Valerio Dewalt Train.
Finegold Alexander + Associates, Inc. is the architect of record for The Godfrey Boston.
Judging by the nascent brand’s first two projects, as Oxford seeks to grow Godfrey, its offerings will be anything but cookie-cutter. In looking to define the brand, Rutledge suggested, “They share distinctive architecture; they share that they’re in an emerging, dynamic location that’s going through a rapid transition; and the interior design is very progressive, quite contemporary and quite hip.” Rutledge noted his firm is actively involved in the design vision and works with the chosen design and architectural firms. “It’s a collaboration,”
he said.
Rutledge added the brand also will “share a lot of the same DNA in terms of how we market it, how we brand it and how we position it against its competitive set.”
As to future Godfreys, Oxford is concentrating on cities that are rapidly transitioning and “particularly focusing on the 24/7 cities in America as places where we think there’s going to be continued growth,” said Rutledge. “So, New York City, Miami Beach, San Francisco, L.A.—those are all markets that are high on the priority list of planting the Godfrey brand.” HB