North Anchor developers searching for new hotel partner
While some minor changes were made to the ongoing North Anchor project, the development is largely on track.
The Lake Oswego City Council, acting as the Lake Oswego Redevelopment Agency, received an update from Urban Development + Partners (UDP) — the developers in the North Anchor project — about the residential component of the development as well as parking and the hotel operator during the Nov. 17 City Council meeting.
The project is expected to bring a mixed-use complex to the property on the stretch of B Avenue between State Street and the alley between First and Second streets.
The city's efforts to develop the property date all the way back to 2004, when the North Anchor block was listed as the centerpiece of the city's East End Redevelopment Plan. The city began acquiring parcels at the site in 2010, and the first request for proposals (RFP) went out in 2015. About a year after a prior proposal for the site fell through, the city reached a memorandum of understanding with UDP this past June.
UDP's mixed-use proposal for the North Anchor site includes a lounge area and rooftop access, an estimated 75 multi-family residential units, 60 hotel rooms and 6,000 square feet of ground floor retail space that could be divided into smaller spaces. These numbers are subject to change.
Sarah Zahn, development director with UDP, said over the last couple months there have been further discussions about the hotel operating partner.
"We came into this proposal with a loose partnership with Atticus Hotel out of McMinnville," Zahn said. "At this point we have mutually decided we are not going to be able to come to business terms with them."
Zahn added that the Atticus Hotel's vision for the future of their business differs from how UDP feels they can put together a deal on the project.
UDP is now in the process of seeking a new hotel operating partner.
"Our priority here is for a unique full-service hotel of high quality and in keeping with what we think downtown Lake Oswego deserves and demands," said Zahn, adding that UDP plans to reach out to two or three pre-vetted operators they've had previous conversations with. "We're at a point in design where we want to move forward with an operator at our side."
UDP hopes to select the hotel operating partner by the end of the year.
Also during the meeting, Zahn mentioned UDP evaluated both the rental and condominium sale market for the location to determine its strength.
While Zahn said there is good demand in the area, she added it would be very expensive to build condominiums in Lake Oswego due to construction cost, liability insurance and sales costs. She said in order to make that option feasible, they'd have to sell the condos for more than $1,000 per square foot, which is a significant risk in the marketplace for them.
"Although we do believe there's strong demand, we don't believe there's strong demand for condominiums above $1,000 per square foot," Zahn said.
She said they will continue focusing on rentals.
Councilor John Wendland inquired about the price range for the residential units and wondered if it would be similar to the Windward. Zahn said rent prices need to be projected two years out but that Windward prices would be comparable.
UPD also had a parking analysis done. City code requires a certain number of parking stalls per hotel room, along with separate requirements for retail and restaurant spaces. While it's a tight location for parking, Zahn has said the goal and the intent is to meet the parking requirements based on zoning code. Zahn said retail parking requirements vary depending on the use and there are already two levels of parking on one parcel and one level at another. She said they've been able to carve out 79 total spaces, with 17 on-street and the rest accommodated in the structure. Zahn said an ongoing discussion has been about whether they're able to provide additional parking at this location.
The current plans include an area that could accommodate underground parking, but Zahn said it would cost an additional $2.8 million. She said this will be a continued discussion with the city about the value of adding additional parking.
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