WILMINGTON – A Miami-area developer aims to convert an 11-story downtown Wilmington office building into a new Staybridge Suites hotel in a $31 million project.
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 beginning the conversion Wednesday.
The hotel, featuring 134 suite-style rooms with a contemporary look and feel, is expected to open to the public in the second quarter of 2022. It will also include a lobby lounge, fitness center, sundries shop and a business center with meeting space.
The project team includes 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 will contribute up to $1 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 up to $14.95 million.
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 continues to raise capital 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 city of Wilmington continues to grow with many new businesses and jobs, but in the city’s urban core at least, there have been no new hotels developed to service the growing number of corporate and leisure guests,” said Nelson Parker, managing director of development at Driftwood Capital, in a statement announcing the project. “Driftwood Capital saw an opportunity to fill a void in the hotel market, and because this is a conversion, we will be ready to launch in a matter of months versus years. The Opportunity Zone designation provided another compelling case, as it will allow both Driftwood and its co-investors to reduce their tax burdens both immediately and well into the future.”
The Staybridge Suites would 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 also recently announced plans to build a smaller, luxury boutique hotel off Market Street.
