August 08, 2013

It's getting harder to find a hotel room in Seattle these days, and that's good news for operators and developers.

A report by Kidder Mathews says 2013 will be one of the best years ever for hotels. Rooms are filling up and prices are rising.

John Gordon, senior vice president at Kidder Mathews, said when occupancy reaches 70 percent that usually means it's time to build more hotels. The report says the average occupancy at downtown hotels will be 78 percent this year; South Lake Union hotels will hit 77 percent; and mid-priced Tukwila hotels will be 68 percent full.

The region is projected to reach 64 percent occupancy this year and see a 4.6 percent increase in room prices.

Gordon said occupancy downtown is as high as he can remember — and he has been in the business for more than 30 years.

These numbers have gotten the attention of developers, and more than a dozen hotels have already been announced, Gordon said.

Like all real estate, hotels move in cycles, Gordon said. Hotels fill up so developers build more; then there's an oversupply of rooms so building stops for awhile.

Courtesy LMN Architects
R.C. Hedreen Co.’s 43-story convention hotel is one of the most high-profile plans for downtown. Demand for rooms is soaring so developers are getting busy.

“When one developer decides to build a hotel, then another one does and another,” he said. “Rather than having gradual development of one hotel every year or couple of years, you end up with clusters of development.”

And today's cluster looks big. Some of the hotels coming along are new projects, while others were dusted off after getting shelved during the recession.

Here are a few of the hotels planned around the area:

• R.C. Hedreen Co. could start construction next year on a 43-story tower with 1,500 hotel rooms and 150,000 square feet of office space on the block bounded by Eighth and Ninth avenues, and Howell and Stewart streets.
• Daniels Real Estate will have a 184-room SLS hotel in his 43-story tower at Fifth and Columbia. Excavation will begin this fall and Daniels wants to start the high rise in a year.
• Stadium Place, which Daniels is also involved in, will get a 23-story, 300-room Hilton Embassy Suites Hotel built by American Life Inc.
• Kauri Investments is planning an eight-story, 126-room Hyatt House at 416 John St. near Seattle Center. Kauri built Hyatt Place at Sixth and Denny, alongside the Annaliese Apartments.
• In South Lake Union, Touchstone has started construction on Hill7, which combines an 11-story office tower and a 14-story hotel. The hotel is on the west side of Boren Avenue, between Stewart and Howell streets, and will be a Hilton Garden Inn with 222 rooms.
• Stanford Hotels Corp. is planning a 15-story hotel with 283 rooms at 300 Terry Ave N. near's South Lake Union headquarters.
• Preliminary plans for hotels have also been floated at Second and Virginia, and Fifth and Stewart.
• A Bellevue development group called TMUD LLC is planning an eight-story, 215-room Hampton Inn & Suites at 4501 12th Ave. N.E. in the University District.
• Bellevue could also see several new hotels. As part of the second phase of Lincoln Square, Kemper Development Co. wants to build a 250-room hotel and a smaller boutique hotel.
• Wright Runstad and Co. may put a 200,000-square-foot hotel in its 36-acre Spring District in the Bel-Red corridor.

The Kidder Mathews report says hotel occupancy should stay high for several years, until the cycle bottoms out in 2016 or 2017. But, barring another financial collapse, the report predicts the bottom of this cycle won't be nearly as bad as the last one.

“Assuming the economy continues chugging along, there will continue to be cycles, but the downside isn't disaster,” Gordon said.

Gordon said expanding the Washington State Convention Center would be huge for downtown hotels. Seattle architecture firm LMN is doing a feasibility study about a one-million-square-foot expansion.

Business travelers are the bread and butter of the hotel industry, Gordon said, and many of the planned hotels have large meeting spaces to get that crowd.

It's not clear whether all the proposed projects will fly or what will happen with the convention center, but the same things that have supercharged the apartment market — jobs, jobs and jobs — should also keep hotels hot.

“There is no question this will be a very active couple of years for hotel development,” Gordon said.

Columbia Center filling up, sprucing up

Columbia Center continues to recover after losing several key tenants during the recession.

According to, vacancy dropped below 30 percent for the first time since September 2009 in the 1.5 million-square-foot building. Companies have absorbed more than 132,000 square feet of space so far this year.

Vacancy there climbed from approximately 20 percent to a high of 37.8 percent during the recession when several companies left, most notably, which had occupied 230,000 square feet.

The 76-story tower, which is owned by Beacon Capital Partners of Boston, has also gotten a facelift.

Crews have been adding signage to the exterior, and columns inside have been painted bright shades of blue and green with directions to elevators, food courts and restrooms.

QFC spending $67M on store upgrades

Kroger is continuing to put big money into renovating some of its signature QFC stores. In 2012 and 2013 the company is spending more than $67 million on major renovations and improvements, including $7.2 million for the QFC in Bellevue's Crossroads Mall.

The store has one of the highest sales volumes in the country, and QFC's corporate headquarters is in Bellevue.

The store, built in 1967, will be expanded by 6,000 square feet to a total of 64,000 square feet. A natural foods section will be added, and each department will grow.

Cornerstone Architectural Group of Kenmore is designing the remodel. Bids for a contractor are set to go out in October.

Here are some of the other stores getting upgrades this year: Greenwood, North Bend, Northshore in Tacoma and Canyon Park in Bothell.

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