Manchester debuts plans for 36 floors that would be third tallest in San Diego – The San Diego Union-Tribune | NutSocia

Developer Doug Manchester, who is building San Diego’s largest single hotel, is about to unveil plans for a new 36-story, 1,150-room hotel tower just a block from the downtown waterfront.

While a major convention hotel was always destined for a Navy-owned site more than 30 years ago, it was only in recent years that Manchester Financial Group began working on – and drafting – the current $550 million -project.

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It will also likely be 80-year-old Manchester’s last major hotel development, says Ted Eldredge, president of the finance group. Manchester developed the 1,628-room Manchester Grand Hyatt near the city’s Bayfront Convention Center, as well as the Fairmont Grand Del Mar in the Carmel Valley. He no longer owns either.

A big unknown remains whether Manchester Financial will be able to secure financing and an equity partner in the current economic environment of rapidly escalating interest rates and construction costs.

“The question is, what terms can I get?” said Eldredge. “Right now the financial markets are not cheap and if interest rates go up a quarter point for a project of this size, that’s a lot of money. Material costs have also increased, so it will be a challenge. If I don’t get the funding I want, I’ll have to wait a bit.

“We’ll probably need both an equity partner and a lender, but I think it’s worth it. There’s a lot of pent-up money out there.”

The short-term plan, Eldredge said, is to submit plans to the City of San Diego sometime in November, eventually for building permits. If Manchester Financial Group manages to secure funding next year, the hotel could potentially be under construction by late 2023 or early 2024, Eldredge estimates.

He anticipates a construction period of around 30 months. Manchester Financial is currently in talks with a luxury hotel chain to operate the property, he added.

Rendering of the entrance to the proposed new hotel

Rendering of the entrance to the proposed new hotel

(Courtesy Manchester Financial Group/Gensler)

The nearly five-acre hotel property represents the last remaining property Manchester controls of the original 12-acre property that his company years ago described as a mixed-use mega-development, formerly known as the Navy Broadway Complex south of Broadway between Pacific was Highway and Harbor Drive. Two years ago, IQHQ real estate investment group acquired the majority of Manchester’s leaseholds as part of its plan to build a $1.6 billion life sciences city on the Bay, which it calls the San Diego Research and Development District . It is also building a long-planned 1.5-hectare public park adjacent to the hotel grounds.

Given the hotel’s location — near the water overlooking the bay — and San Diego’s strong recovery from the pandemic, Eldredge anticipates there will be no shortage of demand for more than a thousand new hotel rooms. While the long-planned convention center expansion remains a big question mark, Eldredge said the business plan for the new hotel relies more on the internal meetings business, which generates significant revenue from food and beverages. The hotel is designed to provide 100,000 square feet of meeting and event space.

Proposed hotel in Manchester

“There haven’t been any 1,000-room hotels built right on the water for almost 15 years,” he said. “And these hotels are not our competition. We will take care of the larger groups to keep them at the hotel and serve them meals twice a day. Yes, the convention center is nice and brings business to the hotel, but it is not essential to the hotel’s success.”

He noted that the Manchester hotel had a built-in financial advantage over the waterfront convention hotels that sit on state tidal flats and pay millions of dollars a year in rent to the Port of San Diego. By comparison, the Manchester lease paid the Navy only $1 a year for nearly 100 years, despite the need to build a new regional headquarters for the Navy at a cost of $210 million.

Alan Reay, president of Orange County-based Atlas Hospitality Group, agrees that the hotel’s prime location is a clear advantage for Manchester, and if he’s able to get financing – which is likely to be costly – it will be ahead of its competition three, four years from now when the hotel is finished.

“I assume on a deal of this magnitude you could get about 50 percent of the funding, so you’d have to come up with 50 percent down payment,” Reay said. “And if the cost of the money is too high, it won’t be paid out. But apart from that, the opposite view would be that everyone else is facing the same problem.

“One of the problems for new hotels is when there are a lot of new offerings on the market, and that’s not going to happen in downtown San Diego. It’s location, location and location, and you’re in for the next 30 years. This is an irreplaceable property. As long as you have the capital to weather the interest rate risk, this is a good investment.”

The new hotel was designed by San Diego-based Gensler, who describes the look as contemporary design with Art Deco and mid-century modern influences. The all-glass facade is accented with tones of bronze and gold, and the lower level of the structure has a creamy limestone facade. Interiors are embellished with soft blue fabrics, backlit crystal, and large-scale art installations.

The more contemporary look is a marked departure from Manchester, whose previous projects have featured greater old-world grandeur with heavier, more ornate furnishings.

Rendering of the proposed lobby area

Rendering of the proposed lobby area

(Courtesy of Manchester Financial Group/Gensler)

“We wanted to create a unique sense of place by the water, so the design relates to our climate in terms of meeting rooms and restaurants and bars that open out and extend onto the square and park, so not just glass walls,” said J. Kevin Heinly, general manager at Gensler. “The use of bronze metals and their warmth are reminiscent of Art Deco, and the bronze cap on the building is illuminated. Therefore, bronze is used throughout the project, be it as a decorative metal around the elevators or in the restaurants and bars.”

Manchester and Gensler are still finalizing details for the various food and beverage outlets, which will include an exclusive gourmet restaurant, a fast-casual option, a lobby bar and a noodle concept. There could be as many as seven restaurants and bars, the Gensler company said. Also planned is a pool terrace on the sixth floor, a large spa and a gym.

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