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October 07, 2016

Hedreen also planning a new 450-room hotel

Seattle Daily Journal of Commerce

Lynn Porter

R.C. Hedreen Co. is planning a 450-room hotel adjacent to the 45-story Hyatt Regency Seattle complex it is constructing two blocks from the Washington State Convention Center.

The Seattle-based developer said the new hotel, at Ninth and Howell, would be more luxurious than the 1,264-room hotel it is constructing at 808 Howell St.

"We would probably try to do something that is a little step above the Hyatt Regency," said Richard C. Hedreen, chairman of R.C. Hedreen Co.

The company is preparing to start the entitlement process for the hotel, and does not anticipate construction for at least four years, he said.

Hedreen president David Thyer said future market conditions could prompt the company to reduce the number of rooms in the planned hotel and add upscale apartments to the project on the quarter-block site.

"That combination has been historically reasonably successful, depending on market timing, around the country - and around the globe for that matter," he said.

R.C. Hedreen opened the Hyatt at Olive 8 in downtown Seattle in 2009 and for about five years after that no other large hotel debuted in the city's core, Richard Hedreen said.

A number of downtown hotels have been announced, started and opened recently, but with so much new housing and office space being built, he said the city still needs more hotels.

The new Hedreen hotel should include a swimming pool, bars and restaurants, and other amenities, the company said. It could share the laundry and storage space with the Hyatt Regency.

R.C. Hedreen Co. and its affiliates have developed, owned and managed investment properties since 1963. Its portfolio has hotel, retail, high-rise office and housing, and includes Hyatt at Olive 8 and Grand Hyatt Seattle.

Original plans for Hedreen's 808 Howell St. complex called for a 40-story hotel with 1,680 guest rooms, and a second tower with 152 low-income apartments over a shared podium.

The company needed an alley vacation from the city to build the full-block project, but failed to get support for that plan from some city councilmembers, so it opted for the smaller Hyatt Regency project.

The company has interviewed several architects and has schematic drawings for the new hotel, which would be kitty-corner from the proposed $1.6 billion expansion of the convention center.

John Gordon, a vice president with Kidder Mathews, said downtown Seattle has had three years of record hotel occupancy - in the low 80 percents - in 2013, 2014 and 2015.

Demand is strong and rising, he said, driven in large part by business travelers thanks to the growth of Amazon.com and other companies. Mid-week occupancy has approached 100 percent at times, he said, and room rates have risen about 10 percent a year in the last couple of years.

This has attracted new development, said Gordon, who is an appraiser specializing in the hotel market.

"Long term everyone agrees we need more hotels in downtown Seattle," he said.

Gordon said occupancy is expected to slip in the next two or three years as new hotels open, but it should come back in time for Hedreen's new project.

The new hotel could capture the top end of market, he said, with the Hyatt Regency Seattle getting convention center or other large groups, "but it will depend on what he builds."

© 2016 Seattle Daily Journal of Commerce. All rights reserved.

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