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.