Hilton likes Inner Harbor as site for luxury hotel Developer H&S; plans more projects in area

THE BALTIMORE SUN

Hilton Hotels Corp. wants to build a $105 million luxury hotel near the Inner Harbor, the third such project proposed downtown in recent months.

At the same time, the developer of Inner Harbor East, on the waterfront south of Little Italy, intends to construct $35 million worth of office and retail space and a new suites-style hotel beginning in the spring.

Like proposals for upscale hotels on Pratt Street by Westin Hotels & Resorts and the Cordish Co., Hilton's interest in building 700 hotel rooms at Inner Harbor East stems from increased tourism and room demand expected to be generated by the recently completed $150 million expansion of the Baltimore Convention Center.

"Hilton would very much like to produce a full-service hotel in downtown Baltimore," said Jeanne Datz, a spokeswoman for the Beverly Hills, Calif.-based hotelier.

"And we think Inner Harbor East is a perfect site for us, near the convention center and Little Italy. It's an area we see as very similar to TriBeCa or SoHo in New York," Datz said.

Officials from the city's economic development agency and H&S; Properties Development Corp., the developer of the planned $350 million Inner Harbor East, declined to comment on the Hilton proposal.

Whether Hilton's proposal moves forward or not, H&S; Properties intends to start work on a second office building and an all-suites hotel with a minimum of 150 rooms around March, building on its success in luring Sylvan Learning Systems Inc.'s corporate headquarters from Columbia.

City's attraction

"If the project is developed consistent with our vision, then we'll continue to attract companies like Sylvan who want the excitement and convenience of the city with amenities, such as parking, of the suburbs," said Michael S. Beatty, vice president of H&S; Properties.

The office building is expected to contain a gourmet grocery and drugstore on its ground floor, a retail element that will be critical in establishing Inner Harbor East as a neighborhood, Beatty said.

The office and retail building, modeled after Sylvan's nearly completed seven-story headquarters, is slated to contain as much as 175,000 square feet.

As much as 40 percent of the office space may be developed on a speculative basis without tenants, Beatty added.

'Strong verbal interest'

Beatty said no tenants have committed to the office project, despite "strong verbal interest." H&S; Properties also is negotiating with several potential owners and operators of the proposed all-suites hotel.

"It shows a willingness to take the next step," said M. J. "Jay" Brodie, president of Baltimore Development Corp., the city's economic development agency.

"I think Sylvan and the new projects being planned represent a turning point for downtown Baltimore, and show optimism and a willingness to take some calculated risk."

H&S; Properties hopes to have both the office building and the hotel completed by April 1998.

In addition to Sylvan's 130,000-square-foot headquarters, Inner Harbor East also contains a 200-slip marina and a restaurant, and work is proceeding on a 13-story apartment complex. The 116-unit project represents the first of more than 800 planned residences within the 20-acre tract.

But by developing a new office building now, Inner Harbor East may disturb the downtown office market's tenuous recovery, analysts said.

"My concern is it creates an anchor outside the central business district, and I don't know that Baltimore has the critical mass to support that level of development," said Robert T. Cashman, a CB Commercial Real Estate Group agent specializing in downtown office properties.

Gambling interest?

And Hilton's interest in Inner Harbor East may lie not just as a site for a new lodging project.

In addition to its hotel portfolio, Hilton also is one of the world's major casino gaming companies, leading some analysts to speculate that the company and John Paterakis Sr., Inner Harbor East landowner and president of H&S; Bakery Inc., may attempt to meld gambling and lodging.

"I think any major hotel there would have to be contingent on gaming," said Mark Lukens, a Westin director of development.

"It's a little off the path to be considered a convention center hotel. And while it may help the city attract really large conventions, I would imagine that at that location they would have to offer discounts to get people there," Lukens said.

Westin is working with the owner of the former News American site at 300 E. Pratt St. to develop an 800-room luxury hotel that could stretch as high as 40 stories over the Inner Harbor.

Pub Date: 10/02/96

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