Real Estate News

Hotel developer acquires downtown Raleigh site next to Convention Center

A Morrisville hotel developer has acquired the Enterprise Rent-A-Car site directly north of the downtown Raleigh Convention Center.

Winwood Hospitality Group paid $4.05 million for the .57-acre site, according to property records. The land fronts McDowell Street and is across Cabarrus Street from the convention center.

Winwood plans to extend Enterprise’s lease for another 24 months while it secures the necessary approvals for a hotel, Amit Patel, the company’s president, wrote in an email. Depending on market conditions, Winwood hopes to begin construction after Enterprise’s new lease expires.

Patel said Winwood will likely propose a 10- to 12-story hotel with about 175 rooms. The company is exploring the possibility of a full-service hotel, such as the nearby Raleigh Marriott City Center and Sheraton Raleigh, or possibly a boutique hotel.

Winwood’s project would add much needed rooms to the downtown hotel market, which has improved dramatically over the past 18 months thanks in part to limited supply.

The downtown market today includes just four hotels: The Raleigh Marriott City Center, the Sheraton Raleigh, the Holiday Inn-Raleigh Downtown (formerly the Clarion) and the Hampton Inn & Suites in Glenwood South.

Revenue per available room at those four hotels through the first four months of the year was $99.62, up 10.1 percent over the same period a year ago, according to STR, a Tennessee company that tracks the lodging industry.

The occupancy rate over that period was 71.3 percent, up from 65.9 percent during the same period a year ago.

Those numbers are a big reason downtown hotels have become attractive properties for investors. Earlier this month, the 353-room Sheraton Raleigh Hotel in downtown sold for $47.85 million, more than twice what the seller paid to acquire the property in 2012.

In 2013, Carey Watermark Investors paid $83 million for the 400-room Raleigh Marriott City Center next to the city’s convention center.

But the improving market conditions have yet to result in any new hotel construction downtown, although Summit Hospitality Group is expected to break ground later this year on a 166-unit Marriott Residence Inn on the west side of Salisbury Street, between West Lenoir and West South streets.

Several other hotel developers are also considering projects in downtown Raleigh.

And earlier this year the city hired a company to do a hotel feasibility study of the downtown market to determine how many additional rooms are needed.

Winwood operates four hotels in Raleigh. Its newest is the 149-room Hilton Garden Inn at Crabtree, which opened this month. The company opened a Hampton Inn and Suites on the former site of the Crabtree Inn in 2013, and also operates two hotels in the Brier Creek area.

David Bracken: 919-829-4548, @brackendavid