A consulting firm the city hired recommends the development of a 93-unit hotel on the 7.5 acre former Target site the city purchased in November 2014.
The recommendation from HVS Consulting and Valuation Services Division of TS Worldwide, LLC is based on findings from a $10,000 market study the city deployed over the summer in an effort to attract hoteliers and development partners to the site now called Town Center 3.
“An adjacent hotel to the Performing Arts and Event Center was identified as an important complementary asset to the [event center], its operations and the redevelopment of our downtown,” said Mayor Jim Ferrell in an email. “The results of our commissioned hotel study confirms the viability of a hotel adjacent to the [event center]. We look forward to the further exploration of partnerships and development of a quality hotel adjacent to our signature [event center] facility now under construction in our downtown.”
The construction of a hotel is part of the city’s vision for the development of a mixed-use project at Town Center 3. The city sent out a request for qualifications for a master developer to lead that project in February but didn’t receive any applications.
Ferrell said in an August Mirror report that two developers were interested but didn’t apply because he believed it wasn’t the right timing, noting that the Performing Arts and Event Center’s bid hadn’t yet been awarded. The center has since broken ground as of Wednesday.
Located at 2141 S. 314th St., the firm estimates an upper mid-scale hotel with limited or select services will be profitable in downtown Federal Way. Services may include a breakfast dining area, 2,500 square feet of meeting space, indoor swimming and whirlpools, a fitness room, a business center, a market pantry, guest laundry and vending areas.
The site was inspected by TS Worldwide, LLC Vice President Matthew Melville on July 23 and the study was prepared Aug. 12.
The 2.15 acre hotel pad sits on the Town Center 3 property, however, that parcel will be subdivided to create a separate taxable parcel for hotel development, the study states.
The firm’s findings project a hotel such as a “Holiday Inn Express and Suites or similar affiliation” would be a good fit.
Because Federal Way is nestled between Seattle and Tacoma, hotel occupancy levels will be influenced by events in both cities.
“In subsequent years, occupancy trends have remained positive, surpassing the 60 percent mark in 2014 for the first time in seven years,” the study states. “Data for the first half of 2015 reflect continued occupancy improvement for the market, prompting market operators to increase average rates substantially.”
Ten hotels were analyzed for historical supply and demand trends.
The firm anticipates it will take about three years to reach a “stablized level of operation” if the hotel opens in June 2017. This finding was based on projected occupancy of 74 percent and and average rates of $161 by 2019/20.
