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Source Says UTC May Get Ultra-Hip W Hotel

The county is apparently slated for a repeat of “whatever, whenever.”

According to Joe Terzi, a Starwood Hotels regional manager, San Diego’s second W Hotel is planned. The wherever is University Towne Center.

The first W, which opened in the Marina District near downtown in 2002, introduced hip to the local lodging market with its jazzy d & #233;cor and rooftop patio bar, a concept that has since been copied by other downtown hotels.

Terzi confirmed in late May that Newport Beach developer Makar Properties LLC plans to build a new W that will have from 200 to 220 rooms.

Houston-based Hines, an international real estate firm whose resume includes Petco Park, is also building a 15-story, Class A office tower as part of what is being called La Jolla Commons , a multimillion-dollar mixed-use project that broke ground in mid-November. It is bordered by La Jolla Village Drive, Executive Drive and the 805 freeway.

On May 30, a public relations representative with a firm representing Makar said that it hadn’t announced the new W Hotel because the contract between Starwood and Makar has not yet been signed. Officials of Makar did not return phone calls seeking comment.

However, Terzi said that base work construction had begun on the hotel and that details of the project, which includes some top-floor residential condos, were being finalized.

“We fully expect to open a new W in the latter part of 2009,” he said. He did not know the cost of construction or how many condos were planned.

Going Up North

While the bulk of the county’s hotel development has been centered in downtown and the Gaslamp Quarter in response to the demand for increased room inventory to feed demand from the 2.6-million-square-foot waterfront San Diego Convention Center, Terzi said UTC is as good or better a market than downtown.

The upscale UTC neighborhood that many refer to as the Golden Triangle includes a mix of biotech, technical, financial, educational and commercial firms.

“In terms of business, that market (UTC) is very strong because it does not have to rely on convention center business,” he said.

Conventions tend to be seasonal, sources say, with more taking place in the spring and fall and fewer in the summer. According to the latest report from the Los Angeles offices of PKF Consulting, a national firm that tracks the lodging industry, occupancy in UTC-area hotels averaged 80 percent in March, while room rates averaged $156 nightly. In downtown, occupancy stood at 82 percent during the year and room rates averaged $195.

Carl Winston, director of San Diego State University’s Tourism and Hospitality School, said the W “is a strong brand that will perform well in the UTC market.”

“I think Starwood, which includes the Sheraton, Four Points, Westin and Luxury Collection brands, is underrepresented north of Interstate 8 up to the Orange County line,” he said.

He added that the UTC area is “a wonderful example of a high-end suburban and lodging market.”

“I liken it to Orange County around the John Wayne Airport,” he said.

No Occupancy Report

The W San Diego does not report occupancy. Its Web site advertised a rate of $349 for a room for two with two double beds for Saturday, June 2.

When the 258-room W San Diego changed hands a little more than a year ago, neither the seller, Kennedy Associates Real Estate Counsel Inc. of Seattle, nor the buyer, San Clemente-based Sunstone Hotel Investors Inc., a real estate investment trust, cited the price. But a report by Atlas Hospitality Group, an Irvine brokerage, placed it at $96 million, or $375,000 per room, as opposed to the county’s 2006 sales average of about $143,000 per room.

Kennedy Associates had arranged the purchase and renovation of the property formerly known as the Old Columbia Square for $62 million for a group of labor union pension funds.

Starwood has W Hotels worldwide. According to its Web site, the company counts 18 in North America, including five in New York City, two in Chicago and two in New Orleans. Los Angeles and San Francisco each have one. Aside from the second San Diego W, others that are planned or are under construction in the United States are in Fort Lauderdale, Fla.; Hoboken, N.J.; Scottsdale, Ariz.; and Miami’s South Beach.


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