Wilmington office-to-hotel conversion project completed
WILMINGTON – A Miami-area developer has completed a $31 million conversion project that turned an 11-story downtown Wilmington office building into a new Staybridge Suites hotel.
Driftwood Capital, a vertically integrated commercial real estate investment, development and lending platform specializing in hospitality, had previously disclosed its intended project after acquiring 1220 N. Market St. in March 2019 for $2.9 million, but announced it was finally beginning the conversion in May.
The hotel, featuring 134 suite-style rooms with a contemporary look and feel, is now open to the public. It includes a lobby lounge, fitness center, sundries shop and a business center with meeting space.
In a Friday announcement, Driftwood Capital said that it was drawn to the project in part by Wilmington’s hub of corporate and legal filings, which could help sustain a healthy clientele for the Market Street corridor hotel that sits within a block of Delaware’s federal bankruptcy and district courts, and within a few blocks of the Leonard L. Williams Justice Center where New Castle County’s vaunted Court of Chancery is located.
“As the corporate capital of America, Wilmington has built-in demand for quality, convenient accommodations to serve corporate travelers as well as the increased number of leisure travelers visiting the area,” said Carlos Rodriguez Sr., CEO of Driftwood Capital, in a statement. “Driftwood identified a void in the hospitality market, with little new hotel development in the city over the past twenty years and is excited to deliver a new extended stay option to travelers in the heart of Downtown Wilmington.”
The hotel project team included Whiting-Turner Contractor Co. and Dever Architects. Driftwood Hospitality Management (DHM), a national hotel operator with over 20 years of expertise, will manage the property.
The Delaware State Housing Authority contributed $1.02 million toward the project through its Downtown Development Districts rebate program. First International Bank & Trust provided a construction and permanent loan for the project of $14.95 million, while Driftwood Capital raised $16.7 million from private investors.
Driftwood Capital sought the office building, in part, due to its location in a designated Opportunity Zone, a federal program that offers significant tax savings if held for a considerable amount of time. Driftwood Capital primarily raised its private funding through a Qualified Opportunity Fund associated with the project, which allows investors to defer paying capital gains rolled into the fund for up to nine years, with tax on capital gains eliminated altogether if the investment is held for at least 10 years.
The Staybridge Suites will join a downtown hospitality market that already features five name-brand hotels: the Hotel du Pont, Doubletree by Hilton, Sheraton Suites, Residence Inn by Marriott, and Courtyard by Marriott. Notably, Buccini/Pollin Group is also currently building a much smaller, luxury boutique hotel off Market Street about three blocks to the south of the Staybridge Suites.