|By Suzette Parmley, The Philadelphia
InquirerMcClatchy-Tribune Regional News
October 30, 2008 - The owner and developer of a half-acre site in Center City plans to build a $420 million Waldorf-Astoria Hotel & Residences complex there.
Think Four Seasons meets the Residences at Two Liberty, said Timothy J. Mahoney III, president and chief executive officer of Mariner Commercial Properties Inc., of Ardmore, which will codevelop the site at 1441 Chestnut St. with Gatehouse Capital Corp., a national real estate investment and development firm based in Dallas.
Mahoney is banking on the continuation of well-to-do empty nesters abandoning big homes in the suburbs for high-end apartments in the city. There will be 136 luxury condos on the top floors of a five-star hotel.
Retail, a signature restaurant, seven floors of valet parking and a spa will take up the bottom 14 floors. The hotel will run from the 16th through the 27th floors, and condos will occupy the 28th through 58th floors.
The hotel is expected to open in the summer of 2012; at 670 feet, it would be the sixth-tallest building in the city.
"There's nothing stopping the demographic trend, with the baby boomers coming to the city and wanting that urban lifestyle," Mahoney said.
He also could use a healthier economy.
Donald J. Trump, for one, is having a tough go making a similar project happen. A Wall Street Journal report yesterday said Trump was struggling to sell high-end condo units in his 92-story hotel tower in Chicago.
The credit crisis has forced other hotel projects planned for Center City, including one at 12th and Arch Streets and another at 1601 Vine St., to delay construction.
Occupancy is down for several Center City hotels, industry watchers say, and the luxury-condo market has also cooled. The Waldorf would add to a crowded field of top-tier residences that includes Two Liberty and Symphony House.
The 48-story Residences at the Ritz Carlton tower, with 270 units that start at $600,000 each, opens in early December.
"Typically, mixed-use projects such as this one require a certain level of condominium presales to finance the overall project," said Peter Tyson, vice president of PKF Consulting, who focuses on the region's hospitality industry. "So the ability to get the entire project under way will depend on the project's ability to presale the condominium units."
Mahoney acknowledged he was facing tough conditions.
"The market has some inventory issues right now," he said. "There's certainly buyers sitting on the market more worried about what their investment portfolio looks like than buying a condo.
"But these buildings take three years to build . . . so whatever the market looks like right now is not what our buyer is looking at."
Mahoney, who was inspecting his group's condo sales office yesterday at 1518 Walnut St., the former Sharper Image building, said condos at the Waldorf would go to market in January.
A one-bedroom unit will start at just above $1 million, and penthouses with a private elevator and 14-foot-high ceilings will sell for $14 million to $15 million.
Groundbreaking is planned for a year later, in January 2010.
Mahoney purchased the parcel, which sits directly behind one of his competitors, the Ritz Carlton and its condo tower, in 2000 with his partner, Brook Lenfest.
Lenfest heads NetCarrier Inc., of Lansdale, a local-exchange carrier, and Brooks Capital Group L.L.C., a private-equity firm in Bala Cynwyd.
Mahoney described the Waldorf tower as "a mirror image of the new Ritz tower going up." He said the Ritz validated that there was a high-end condo market at 15th and Chestnut Streets (more than 60 percent of the units at the Ritz have been sold, according to management).
The Waldorf tower will be designed with glass, granite and metals. Mahoney originally planned an all-concrete design, but he switched so the building would have a more contemporary facade.
One floor of the hotel will feature a spa and a 50-foot indoor swimming floor.
Mahoney said he and Lenfest had supplied all the equity so far.
"This is not investors' money," he said. "It's all our own equity. Until credit markets improve late next year, it's all out-of-pocket."
The Waldorf enters a five-star hotel market that is not very big. There are 95 rooms at the Rittenhouse, 275 at the Ritz Carlton and 365 at the Four Seasons. The Waldorf will add 175 rooms.
"There's plenty of room for us," Mahoney said.
Paul R. Levy, president and chief executive officer of the Center City District, said the area the Ritz and Waldorf would occupy was undergoing a makeover.
"The Ritz is really transforming that area in a positive way," he said. "The Packard Building has a new restaurant by David Grasso, there are major improvement plans for Dilworth Plaza, and with the Convention Center expansion there will be a lot more foot traffic coming toward City Hall."
On the Waldorf's chances for success, Levy said: "It really depends on how they position themselves in the market."
For Hilton Hotels Corp., planting the Waldorf flag in Center City Philadelphia thrusts it into the luxury marketplace for the first time.
The company owns other properties here - the Embassy Suites Center City on the Parkway, the DoubleTree Hotel on Broad Street, the Hilton Inn at Penn in University City, and the Hilton Airport Hotel.
"The city of Philadelphia and the Waldorf-Astoria both have arrived in the 21st century with style and a sense of place and purpose," said Ross Klein, global head of luxury and lifestyle brands for Hilton Hotels Corp.
Contact staff writer Suzette Parmley at 215-854-2594 or email@example.com.
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