CNG Tower owner mulls suites hotel
Pittsburgh Business Times - by Dan Fitzpatrick
DOWNTOWN -- The owner of CNG Tower may build a suites hotel in the Cultural District, at the southwest corner of Seventh Street and Penn Avenue.
If built, the hotel would have 100 to 150 rooms, with a conference center, health club, catering and parking designed to service the office tenants at CNG Tower next door.
Although it is only one of a handful of development options for the vacant site, the suites hotel concept is receiving serious consideration from The Yarmouth Group Inc., a New York pension fund adviser that purchased the 583,000-square-foot CNG Tower in 1995 for $82.1 million.
"I think (Penn and Seventh) is one of the best sites for that, and I think it should be looked at," said Gerry Dudley, regional executive vice president with The Galbreath Co., which manages CNG Tower and is assisting Yarmouth with development of the site.
Although Yarmouth owns development rights for the property, Penn Liberty Holding Co., a subsidiary of the Heinz Endowments, owns the ground -- and as a result, holds sway over future development there.
Jack Kime, the endowments' chief financial officer, said the suites hotel "would be a nice complement to the Cultural District. It may be right up our alley."
Carol Brown, the head of The Pittsburgh Cultural Trust, could not be reached for comment.
Hospitality observers said the cost for the hotel would be about $100,000 a room, meaning the price tag on the project could range from $10 million to $15 million.
The Yarmouth Group could not be reached for comment, but if it were proceed with the suites hotel, it would join a growing list of operators planning similar concepts for several parts of the metropolitan area.
In Cranberry, Creative Real Estate Development Co. wants to build a 128-unit Residence Inn by Marriott, an extended-stay suites hotel that would sit at the intersection of Commonwealth Drive and Freedom Road, near the Pennsylvania Turnpike.
Green Tree-based Interstate Hotels also wants to build a hotel under the Residence Inn by Marriott flag, this one near RIDC Park West in Findlay Township.
Several other hotel operators are eying the same corridor, which leads out to the airport. Amerisuites, a suites hotel concept, is close to signing a deal for a 128-room hotel with Texas-based Woodmont Cos., which plans to develop a 230,000-square-foot shopping center in Robinson Township, along Route 60. Also, Homewood Suites continues to scout for potential sites along the same stretch, having recently backed out of plans to build a hotel in North Fayette Township, along Route 60.
If all that wasn't enough, hotel observers said Hampton Inn & Suites has its eyes peeled for potential locations as well.
"Everyone is out building hotels," said Don Rodgers, president of Creative Real Estate Development. "Soon, the market will be overbuilt again."
Mr. Rodgers' Cranberry hotel, which will start at 96 rooms and eventually expand to 128, is expected to receive final planning approval this week.
Typically, a suites hotel features larger rooms and longer stays than a conventional hotel, which averages stays of only a day and a half. At extended-stay suites hotels, guests linger for six days, on average.
Much like their competitors, suites hotels compete for the business traveler, with rooms that feature a bedroom, a living room and often, a bathroom that splits the room into halves. A suites hotel is easier to finance than some of its conventional brethren, with less overhead and often higher room rates.
"If I were building a hotel, this is what I would want to build," said Barry White, general manager of the Hawthorn Suites Hotel, in Green Tree.
But would such a concept work Downtown? Some say no.
"I don't think there is enough demand for this type of product," said Patrick Duffy, general manager of the Pittsburgh Hilton & Towers.
But the Ramada All-Suites Hotel is the only suite operator in the center city, creating elbow room for future operators. And if the David L. Lawrence Convention Center expanded west into the Cultural District, demand for rooms would most certainly rise.
In any case, The Yarmouth Group is far from a final decision, which it hopes to make sometime next year. In the end, a hotel could exit the picture altogether. In fact, one real estate source familiar with The Yarmouth Group said the pension fund has approached PNC Bank Corp. about anchoring an office building at the same site, Seventh and Penn.
"Yarmouth has a number of options," said Mr. Dudley, of The Galbreath Co.
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