Long-planned hotel and retail project in Durham moving ahead

dbracken@newsobserver.comMarch 6, 2013 

A Raleigh real estate developer has begun construction of a new hotel and retail center in Durham that has been five years in the making.

MJM Group plans to build a 105-room hotel and 30,000 square feet of retail, restaurant and medical office space on a pie-shaped 6.4-acre tract just off Chapel Hill Boulevard near Interstate 40. The company has spent the past several years assembling and rezoning the property, which was once five separate parcels.

Anuj Mittal, who runs MJM along with his wife Vinita, said the company has now secured lease commitments for more than 60 percent of the space. He said the $20 million to $25 million project, called Gateway Terrace, will include a Home2 Suites extended stay hotel and a Mattress Firm outlet as well as three restaurants: PDQ, Chipotle and Bruegger’s.

Anuj Mittal said MJM has secured a financing commitment from a private equity firm and expects to complete the retail portion of the project by the end of the year. Construction of the hotel is scheduled for completion in the first quarter of next year. The project is a joint venture between MJM and Griffin Stafford of Charlotte.

This would be the third, and largest, hotel-driven project that MJM has developed in recent years. The company developed a Courtyard by Marriott hotel at Raleigh’s Triangle Town Center mall and is now constructing a $17 million hotel and retail project in Charlotte.

MJM focuses on building hotels on sites that have proven challenging to developers, either because of their topography or zoning or for some other reason.

Among the biggest challenges to developing the Gateway Terrace site was assembling the land, which is surrounded by commercial development but had been zoned for residential use. Vinita Mittal said a number of the property owners had grown up there and had differing opinions on whether to sell.

“There was a lot of history there,” she said.

The shape of the site, which is bounded by Chapel Hill Boulevard, Southwest Durham Drive and Watkins Road, also posed challenges. Anuj Mittal said the company went through about 100 site plan versions, including a proposal submitted to the city in 2008 that included a 68,000-square-foot hotel and just one restaurant.

MJM expects Gateway Terrace’s location – in between Durham and Chapel Hill – will allow it to draw shoppers from both directions as well as out-of-town visitors with business or research at Duke University or UNC-Chapel Hill. About 50,000 cars pass by the location daily along Chapel Hill Boulevard.

“We’re right in the middle of two big markets,” Anuj Mittal said.

After bottoming out in 2009, the hotel industry has been making a gradual recovery in recent years. The hotel occupancy rate in the Triangle last year was 60.5 percent, down one-10th of a percentage point from 2011, according to Smith Travel Research, a Tennessee company that tracks the lodging industry.

But hotel owners, who had to offer significant discounts and concessions to get people into rooms during the recession, are now in a slightly better position to hold the line on rates. Revenue per available room, a key industry statistic, was up 3.5 percent in the Triangle last year.

The Mittals got started in the lodging business by buying an old Marriott hotel near Duke University in 2004 and converting it into a Quality Inn & Suites. They self-managed the property for a few years before deciding to become developers. These days the couple no longer manages the hotels they are involved in, preferring instead to focus on tussling with sites that other developers don’t have the patience to deal with.

“You can only do one thing at a time,” Anuj Mittal said.

Bracken: 919-829-4548

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