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Business Observer Friday, Aug. 4, 2017 3 years ago

Bucking the Trend

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Sarasota will soon be home to four new downtown hotels. But Ocean Properties is taking a different tack.
by: Kevin McQuaid Commercial Real Estate Editor

Five months after signaling that it planned to raze and revamp its Sandcastle Resort at Lido Beach property, Ocean Properties Hotels Resorts & Affiliates has further refined its proposal for the Sarasota hotel.

As part of a roughly $100 million upgrade, the Delray Beach-based company plans to demolish the existing 176-room hotel, which opened in 1953, and replace it with a pair of sleek towers rising nine and 10 stories.

The new Sandcastle Resort also would feature 128 new rooms -- each having an unobstructed view of the Gulf of Mexico -- together with roughly 20,000 square feet of meeting, event and restaurant space, according to plans submitted late last month to Sarasota officials. Entryways and exits also would be streamlined, according to a site plan filed late last month.

The amount of meeting and retail space would rank among the largest for hotels in Sarasota County, according to tourism agency Visit Sarasota County statistics.

“It's a very contemporary design,” says Bruce Franklin, president of Land Resource Strategies, the real estate consulting firm working with Ocean Properties on the proposal. “It's very well thought out, and an incredibly efficient design.”

The company, which bought the former Helmsley Sandcastle hotel in February 2014 for $27.4 million, hopes to complete the redevelopment from a Nichols Brosch Wurst Wolfe & Associates Inc. design in 2019.

Ocean Properties is expected to include the renovated Sandcastle resort in its Opal Collection of luxury hotels, a current group of 11 properties in Florida that includes the Lido Beach Resort in Sarasota; The Resort at the Longboat Key Club; the Edgewater Beach Hotel, in Naples; the Sandpearl Resort and the Opal Sands Resort, both on Clearwater Beach; and the Zota Beach Resort, on Longboat Key, which recently re-opened after a multimillion-dollar renovation.

In all, Ocean Properties owns more than 100 hotels containing 17,000 rooms throughout North America, including the Sanibel Island Beach Resort and the Marriott Key Largo Bay Beach Resort, according to its website.

But the plans for the 1540 Benjamin Franklin Drive property on Lido Key come as Sarasota is preparing to absorb four new upscale hotels — after losing roughly 600 keys to condominium conversions a decade ago.

In all, the new hotels, and a fifth completed early in 2016, will add or have added nearly 820 new keys to the city's inventory, despite a lack of new traffic drivers such as a conference center or corporate headquarters' relocation.

Sarasota's Siesta Key Beach, however, has been riding a wave of positive publicity after being named America's best in May in an annual survey — the second time that has occurred this decade.

After Stephen “Dr. Beach” Leatherman named Siesta Key No. 1 in 2011, tourism officials reported a consistent spike in hotel traffic that was sustained for years.

The city's handful of new hotels — a 255-room Westin; a 180-room Embassy Suites; a 164-room property known as Ovation that will be part of the Marriott Autograph Collection; the 89-room Sarasota Modern; and a 138-room aloft that debuted last year — are all located in or just outside of Sarasota's urban core, just blocks from each other.

Ocean Properties' plan, by contrast, would result in a 304-room hotel on a six-acre tract of beachfront land on Lido Key, outside the city center.

Analysts say that distance -- together with its beach access — will differentiate Ocean Properties from the pack of newcomers.

“The beaches in Sarasota are totally different markets from downtown, even though one can access the beaches there within a 20-minute drive most of the year,” says Kent Schwarz, an executive vice president at commercial real estate brokerage Colliers International Florida, who specializes in lodging properties.

“The new downtown hotels in Sarasota, I believe, will draw primarily from lodging properties at the (Sarasota-Bradenton International) airport and from incremental gains in demand,” Schwarz adds.

“But there's nothing like staying at the beach. It's a totally different experience and as such there's often a totally different product. And Ocean Properties is a great company with a great portfolio. They know what they're doing.”

As part of the redevelopment and rezoning request for the Sandcastle Resort, Franklin says Ocean Properties has completed both a required traffic study and neighborhood meeting.

Sarasota's Development Review Committee, the first step in the development process, is expected to consider Ocean Properties' proposal in mid-August.

Unless major obstacles occur, hearings before the City Commission could occur as early as November.

“The renovated Sandcastle would be a nice addition to the lodging inventory in Sarasota,” Schwarz says. “I think it will spur others to make similar investments.”

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