New hotel construction on Jackson Road 'on hold' as owner seeks financing
Site work for a new hotel has already started on Jackson Road, just west of the Clarion Inn, but it's stopped as the owner pursues construction financing in a difficult lending climate.
Lon Horwedel | AnnArbor.com
The site has been cleared, heavy equipment remains on the 8-acre parcel and the property looks like a construction zone.
However, a series of delays compounded by the national financing crisis and hotel industry downturn has put the brakes on the Westside Ann Arbor project.
“It’s on hold,” said Akram Namou of A&M Hospitality in Center Line. “There’s no financing.”
He added: “The project has not been abandoned.”
Namou, who owns the neighboring Best Western on Jackson Road south of I-94 between Maple and Wagner, also owns several other hotel properties in Michigan, he said.
“I’m a very qualified borrower,” Namous said. “… The banks are not lending money, especially in Michigan and especially in new construction.”
And that, he said, leaves the project in limbo while he tries to secure the funds to complete the $6 million project for a 102,000-square-foot, four-story Hampton Inn & Suites with 99 guest rooms.
Nationally, hotel projects are suffering some of the steepest lending downturns in a climate where many commercial real estate owners are struggling to find capital for construction loans and other financing.
At the same time, as travel declined, the average U.S. hotel’s profit declined 35.4 percent in 2009, according to PKF Hospitality Research.
Ann Arbor hotel occupancy so far this year “is probably close to flat,” said Mary Kerr, president of the Ann Arbor Convention and Visitors Bureau.
That follows average occupancy and daily rate data from 2009 that generated “the greatest decrease in the history of our tracking,” she said.
Occupancy in 2009 was 58.9 percent, compared to a statewide average of 47.5 percent.
Still, Namou said, he hopes to restart the project. He said he’s still aggressively pursuing financing.
“We have not given up because we have invested some money into the site,” he said. “But we really need construction financing to do the project.”
Meanwhile, from the city’s perspective, the hotel is ready to move forward.
“They have an approved site plan and they’ve started construction,” said Alexis DiLeo, Ann Arbor planner.
Comments
Virgielyn
Tue, Aug 10, 2010 : 8:38 a.m.
can i ask what bank are willing to finance the contruction and establishment of a new hotel and reason for agreeing or refusing to lend money. thanks
AlphaAlpha
Mon, Jun 14, 2010 : 9:05 p.m.
If you are upset with the bailouts of the multinational banks, investigate moving your money to any of our fine local banks. Just as safe, better for all in the community. Vote with your pocketbook.
ffej440
Mon, Jun 14, 2010 : 12:09 p.m.
Good thing we bailed the banks out so they could hold on to our money.This has nothing to do with credit or the project, the banks just don't want to lend money right now. I thought the whole reason for the bailout was to keep the banks solvent so they could support our people. Looks like it was so they could invest elswhere and continue to collect large bonus money! What we need is a Federal Bank not a Federal Reserve.
81wolverine
Sun, Jun 13, 2010 : 5:51 p.m.
This project will probably take a while with the way banks are being tight with money - especially for any commercial projects. Plus, hotels in that location haven't done too well other than Webers down the road a bit. The Best Western is actually a nice hotel with very good meeting facilities. But, the economy just needs to pick up for any hotel project to get off the ground I'd think.
lefty48197
Sun, Jun 13, 2010 : 2:11 p.m.
Why do we even have banks anymore? They charge us 6% for auto loans, 28% for credit card debts, they pay us 0.5% interest on our checking account deposits yet they STILL don't have enough money to loan to entrepreneurs with proven track records? As for the accusations of sexual assault or misconduct, I don't think it's really fair to blame the owner. I'm pretty sure he wasn't at the hotel when the alleged crimes occurred.
AlphaAlpha
Sun, Jun 13, 2010 : 12:26 p.m.
Reduced travel, reduced occupancy rates, lower room rates, reduced bank lending, higher lending standards; all suggest: this project is complete, as is. Evidence suggests we are in the early years of a credit collapse induced deflationary depression. We can expect additional failed projects.
russellr
Sun, Jun 13, 2010 : 8:41 a.m.
It would help is they lowered there prices for a room. Come down $20.00 a room and see what happens.
Paula Gardner
Sun, Jun 13, 2010 : 7:37 a.m.
Alan, Thanks for connecting readers to that item from earlier this week. My fault that it wasn't linked to or mentioned here. Paula
a2grateful
Sun, Jun 13, 2010 : 5:35 a.m.
From the owner: "Theres no financing... The banks are not lending money, especially in Michigan and especially in new construction..." From the industry: "Average U.S. hotels profit declined 35.4 percent in 2009... and generated the greatest decrease in the history of our tracking..." From the City: "... the hotel is ready to move forward..." Maybe the City of a2 should become the financier of this project, too. We have plenty of "investment capital" (aka taxpayer revenue past (surplus "buckets"), present, and future), and a great need for new rooms in Ann Arbor. Just ask Valiant. In exchange, a folly fountain could be built out front... Buckets and fountains... it's how we roll (or sink) around here...