|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Business News
Apr. 27, 2007 - After months of delay, the owner of the Sheraton Bal Harbour announced Thursday it would demolish the hotel to make way for a luxury St. Regis resort -- a project expected to generate more than $1 billion in condominium sales.
The decision by Starwood Hotels and Resorts ends months of uncertainty over the oceanfront project, as the New York company wrestled with building a massive condominium complex in South Florida's cooling real estate market. And it means demolishing one of the region's largest hotels to make way for a smaller but far more luxurious one, catering to five-star travelers.
"It's a fabulous location, and it's going to be a tremendous project," Starwood CEO Bruce Duncan said.
Though the project was announced in the spring of 2005, Starwood delayed starting it because of rising construction costs and a depressed market for luxury condominiums.
Late last year, Starwood executives told analysts they still had not made a final decision -- despite launching an aggressive sales campaign that has already generated contracts and reservations on about a third of the resort's nearly 300 condominiums.
"Starwood was telling me the whole time: We have a deal," said Alicia Cervera LaMadrid, the top sales executive for the Related Group, Starwood's partner in the St. Regis venture. "They paid the broker commissions in November. Talk about putting your money where your mouth is."
The 645-room Sheraton Bal Harbour -- designed by Morris Lapidus and opened in 1956 as the Americana -- will be replaced by three towers standing 27 stories tall. They will house 268 condominiums selling for between $1.8 million and $5.8 million; 219 hotel rooms; and 24 luxury time-share units known as fractionals.
Starwood issued an official lay-off notice this week for its 648 workers. The Sheraton Bal Harbour will close July 1 and be demolished this fall, Starwood said. The new St. Regis is scheduled to open in May 2011.
Initially all rooms in the St. Regis were to be sold off as condo-hotel units, which owners could have rented out. But with the condo-hotel market soft and hotel rates soaring, Starwood and Related opted to retain ownership of most of the rooms.
Related Chairman Jorge Perez said the oceanfront location, Bal Harbour's ritzy reputation, and the four-year construction schedule will tide the project through the real estate slowdown.
"I would say the Florida market should be stabilizing in a year and a half to two years," Perez said. "I think in Year Three, you're going to see greater demand and lesser product. And nothing that is like this."
Copyright (c) 2007, The Miami Herald
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