News

Bohannon's Menlo Gateway hotel project moving forward

 

A new full-service luxury hotel is on Menlo Park's horizon: Developer David Bohannon said he has found a "very capable, very excited" partner for his Menlo Gateway project.

While voters approved the required zoning changes in 2010, construction of the 1-million-square-foot office-hotel complex on 16 acres along Independence and Constitution drives has sat in limbo as Mr. Bohannon attempted to solve the conundrum presented by his development agreement with the city: The office component, which has an easier time attracting investors, can't proceed without the hotel, which has faced a much tougher investment market, according to Mr. Bohannon.

"While there's been lots of news about hotels getting developed here and there, none of those is this type of hotel," he told the Almanac on Friday, Jan. 9. "The institutional market has been very steadfast in just avoiding major capital investment in large, full-scale almost urban type hotels."

One partnership that looked promising didn't pan out. "I spent a year and a half working with one guy and I cut him loose. I just couldn't make a deal with him. That was painful. ... I thought we were going to get there but in the end, we couldn't," Mr. Bohannon said. "It caused me to restart the process. ... I had to look for someone capable of developing a high-end, full-service hotel in a market environment that is not cooperating with that."

He isn't quite ready to name the hotel developer he's been working with, as the final agreement still has "a little ways to go," but he thinks he'll be introducing the group to the city in late February.

"I will say: a couple months ago, after working with these guys for several months, we entered into a memorandum of agreement outlining the chief principle terms of our deal," Mr. Bohannon said. "In the meantime, I've completely engaged my design team – the marketers, engineers, all the people required to take it from the concept to the full design."

He will have to ask the city to modify the development permit, as the current hotel design scraps the original plan for an attached health club.

Other adjustments include not necessarily waiting to lease 60 to 70 percent of the office space before starting construction.

"We would like to have that, but quite honestly, if I have to, we would figure out how to go ahead with at least the parking structure because the hotel needs that. We're not going to hold up the hotel."

He is scheduled to present the annual update on the project to the Planning Commission on Monday, Jan. 12. The development agreement estimates that Menlo Gateway will provide an estimated $1.4 million in annual hotel revenue, and also requires a $1.25 million contribution toward Belle Haven and Bedwell Bayfront Park improvements.

Construction could start some time in 2016. "This is the part of the program I like – when we get to do it," Mr. Bohannon said.

Comments

1 person likes this
Posted by Frugal
a resident of Menlo Park: Downtown
on Jan 9, 2015 at 3:10 pm

Did anyone really expect that Bohannan would build this project any time or soon or that he wouldn't be back for more concessions from the city?

"He will have to ask the city to modify the development permit, as the current hotel design scraps the original plan for an attached health club."

Will someone reading this please explain where the water for this and other major project will come from?



2 people like this
Posted by Menlo Voter
a resident of Menlo Park: other
on Jan 9, 2015 at 3:44 pm

Menlo Voter is a registered user.

City Council please stick to the agreement. NO CONCESSIONS. NO MODIFICATIONS. Bohannon builds his hotel as approved by the voters and he should not be allowed to rent office space until it is built. In my opinion it was a mistake approving it in the first place. It was not a good deal for the city. Now Bohannon is trying to make it even less of a deal for the city.


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Posted by Robert
a resident of Menlo Park: Felton Gables
on Jan 9, 2015 at 3:59 pm

Robert is a registered user.

Hotel Tax is a big one for any city. MP does not seem to jump on that bandwagon. People who stay in hotels also buy things from the hotel and around the hotel (food, etc.) when you look at 10-12% transient tax, that adds up fast. People want all the services (police, fire, streets etc.) but do not want the places that generate the taxes to pay for it.
@ Frugal - the water? As in what they will consume or what it will take to build it? Either way, if MP does not I assure you Palo Alto or RWC will - so same end result.
I do think Bohannon plays the city, so do not read this wrong. I agree with 'part' of what @MenloVoter said, stick to the original agreement. But remember we need the tax base


1 person likes this
Posted by Alfred
a resident of Menlo Park: Felton Gables
on Jan 9, 2015 at 4:07 pm

Do empty hotel rooms generate tax revenue? Just how many more hotels, luxury or not, does MP need?


2 people like this
Posted by SteveC
a resident of Menlo Park: Downtown
on Jan 10, 2015 at 8:17 am

SteveC is a registered user.

How many empty hotel rooms are there??????? Easy to make statement with no facts


1 person likes this
Posted by Excited
a resident of Menlo Park: Central Menlo Park
on Jan 12, 2015 at 12:38 pm

The doubt and skepticism discussed above is simply ignorance. This project is one that has taken a long time for both the developer and the city to put together. I have full faith in Bohannon's ability and intent to provide this project within the terms approved by the city council.


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Posted by Menlo Voter
a resident of Menlo Park: other
on Jan 12, 2015 at 2:13 pm

Excited:

Bohannon is already asking to be excused from what he agreed to. How does that jibe with your statement, " I have full faith in Bohannon's ability and intent to provide this project within the terms approved by the city council."?

I have no such faith. Bohannon got a sweetheart deal and is now trying to get out of some of its provisions. Forget it.


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Posted by voter
a resident of Menlo Park: Allied Arts/Stanford Park
on Jan 12, 2015 at 4:43 pm

wasn't there a vote by the public about this project? How can the terms be modified now?

There is no reason to modify the terms with the city. Or if the city does, then negotiate more benefits for the city.


1 person likes this
Posted by Still excited
a resident of Menlo Park: Central Menlo Park
on Jan 12, 2015 at 6:49 pm

Menlo Voter, it occurs to me that you may not fully understand the terms agreed upon for this project, which you clearly do not support. You said "Bohannon builds his hotel as approved by the voters and he should not be allowed to rent office space until it is built." Rent what office space? I think you're confused, which is ok. The majority of people in opposition of this project haven't actually taken the time to understand what it is they're opposing. What Bohannon is suggesting in the article is that he would like the ability to construct the office buildings without having them 60-70 percent pre-leased. A term for this is "spec building." Given their location however, Bohannon should have no problem pre-leasing those buildings. The article says nothing about modifying the process in which the hotel is built. It still has to be built before any office can be. A few things have changed though. The flag of hotel has changed. As a part of that change the health and fitness portion of the project is no longer. The health and fitness club was a part of the Renaissance Club Sport flag. This change has been addressed above. The bones of this project have not changed, and they won't. So, Menlo Voter, along with anyone else who feels Bohannon is trying to dupe the city for a better deal, you can rest easy. Bohannon will build a hotel, and then he'll build office buildings. All the huffing and puffing in the world won't stop it.


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Posted by Menlo Voter
a resident of Menlo Park: other
on Jan 12, 2015 at 7:09 pm

Menlo Voter is a registered user.

still excited:

I'll believe when I see it. In the mean time I expect our city council to insist Bohannon stick to the terms of the agreement.


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Posted by Richard Vaughan
a resident of another community
on Jan 13, 2015 at 11:17 am

However this ends up, the increasing traffic nightmare that is Marsh Road, especially between Bay Rd & Willow, will not be alleviated by building another hotel and office park . My prediction is that unless Menlo Park, Redwood City and other peninsula towns come together soon to solve some of these traffic woes, businesses will seek other sites to hold events because no one can get to our region in a reasonable amount of time.
While I wish Mr. Bohannon good luck with his project, if he is the island in the middle of a traffic jammed freeway, who can get to him?
The Dumbarton Rail project needs to be moved to the front of the line, as does adding more cars onto the CalTrain and getting the electrification done. The continued urbanization of the the peninsula cannot be done without realistic transportation planning.


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Posted by Dagwood
a resident of Menlo Park: Allied Arts/Stanford Park
on Jan 13, 2015 at 2:47 pm

It sounds like the main change to be proposed is not to have a separate health club and to instead make the hotel somewhat larger. In principle, that should lead to greater revenue for the city through more hotel rooms and so higher Transit Occupancy Tax. This will not mean changes to the development agreement, which allows for such changes that basically benefit the city. The actual modified proposal is not out yet, but should become public around the end of February. Whether a first office building plus parking is build along with, or after, hotel construction will apparently be laid out then also. True, the traffic on Marsh is some of our worse.


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Posted by Kevin
a resident of Menlo Park: Central Menlo Park
on Mar 30, 2015 at 12:06 pm

What will happen to the businesses that are there now? Will they get a chance at the retail or office space in the new development?


Sorry, but further commenting on this topic has been closed.

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