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Commercial Real Estate News Sussex County

Grotto Pizza reveals hotel plans for Dolle’s corner

Katie Tabeling

Grotto Pizza has filed plans for a four-story mixed-use project with 60 hotel rooms, as well as a Grotto that faces Rehoboth Avenue. | PHOTO COURTESY OF REHOBOTH CITY

REHOBOTH BEACH — The corner of Rehoboth Avenue may look different in the near future, as Grotto Pizza and its partner has filed plans for a 60-room hotel and a restaurant at the former Dolle’s Candyland spot.

Plans filed with the Rehoboth Beach Planning Commission show a four-story structure, complete with two levels of underground parking. The first floor is planned for 14,021 square feet of retail, which would include a Grotto Pizza location and possibly three other businesses. The second floor would have 16 hotel rooms, in addition to a gym, breakfast venue and kitchen and an outdoor pool.

The remaining 44 hotel rooms will be on the third and fourth floor. The underground parking is proposed for 61 spots, according to documents filed with Rehoboth Beach officials.

The plans don’t come as an entire surprise, as Grotto Pizza Vice President Jeff Gosnear confirmed to the Delaware Business Times that it was exploring building a boutique hotel on the block in late August.

“We have been working with our architects to develop a property that would fit with the character of Rehoboth and the boardwalk,” Gosnear said. “We do not have a cost estimate yet, and we are not sure how long it will take to get approvals from the town.”

Grotto Pizza and their partner investor, Onix Group, of Kennett Square, Pa., bought the entire oceanfront block that stretches from Kohr Brothers Frozen Custard to Zelky’s Beach Arcade for $6 million in early 2021.

Grotto Pizza owns the land where its 15 N. Boardwalk location is, as well as the closed Sirocco Hotel on the other side. On the second floor of its North Boardwalk restaurant is a VRBO apartment that is popular with visitors. Onix Group, however, owns the 1. Rehoboth Avenue block itself.

The two companies have consistently presented as a unified group on buying the former Dolle’s storefront. Onix Group is a real estate development and investment firm, known for building the Hyatt Place hotel in Wilmington’s Riverfront, along with Big Fish Kennett, Milford Movies, Georgetown Apartments and the Terraces at Pike Creek.

After 60 years in business, Grotto Pizza has 23 locations in the region and has become a Delaware titan in its own right. Pulieri first opened a pizza restaurant in 1960 as a way to fund his college tuition. Three years later, Grotto Pizza opened a second location on the boardwalk as a seasonal operation. In 1974, he opened the restaurant year-round to meet the demand.

Dolle’s Candyland announced it would move from the prime oceanfront block at the end of 2020, due to rising rent costs. The candy store has since moved just a few storefronts away to 9 Rehoboth Ave.

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