OAKLAND — Downtown Oakland will get its first new hotel in more than a decade with a project planned for the East Bay city’s bustling Uptown district, developers said Wednesday.
The hotel would mark the entry into the Bay Area of West Elm Hospitality, a unit of retailer West Elm, which is a Brooklyn-based subsidiary of retailer Williams Sonoma.
“The New York City hotels of West Elm are very much boutique-style hotels, all four stars, and they should do really well in Oakland,” said Dharmesh Patel, executive managing director of the hotels unit of Colliers International, a commercial realty brokerage.
West Elm intends to open a 150-room hotel as part of an expansion of the developments and businesses in The Hive complex in Oakland’s Uptown neighborhood.
“We feel right at home in Oakland, a city undergoing tremendous change and growth,” said Peter Fowler, vice president of West Elm Hospitality. “Its influences are felt in technology companies, a wonderfully diverse maker culture and art scene, and of course, its pioneering food movement.”
The hotel will be built at 2401 Broadway near 24th Street and is expected to open by 2020. A venture of Signature Development Group and Jordan Real Estate Investments is developing the hotel.
“We have been a part of the transformation of this neighborhood from underutilized lots to what is now a bustling scene of activity, with local entrepreneurs, artists and chefs, creating a thriving environment,” said Michael Ghielmetti, president of Signature Development.
West Elm Hospitality operates hotels in Detroit; Minneapolis; Savannah, Georgia; Charlotte, North Carolina; and Indianapolis.
The hotel will be built in part of the old auto row of downtown Oakland. The hotel, its rooms and decor will reflect the influence of the old auto industry, the developers said. A number of car dealerships operated in the vicinity for decades, and the area also once housed Chrysler’s first West Coast vehicle assembly plant.
“Pandora, Uber and other tech companies have located in downtown Oakland, and they are definitely driving the demand for more hotels,” Patel said. “You are seeing more tech employees working in downtown Oakland, and companies are getting priced out of San Francisco and are migrating over to the East Bay.”
Among those: Blue Shield, which in March disclosed it would move its headquarters and 1,200 workers from San Francisco to downtown Oakland.
No new hotels have opened in downtown Oakland since the Courtyard by Marriott opened in 2002.
“Downtown Oakland hasn’t had a new hotel in a while,” Patel said. “West Elm is looking to bring in more of a millennial theme into the Oakland market. Millennial guests are looking for a unique experience, and Oakland can provide that.”
One of Oakland’s busiest developers sold a recently completed housing project in the Temescal neighborhood.
Signature Development Group and partner Jordan Real Estate Investments sold the 33-unit rental project at 5239 Claremont St. to St. Regis Properties for $20 million.
“We’re really excited to work with them,” said Mike Ghielmetti, president of Signature Development Group, of St. Regis. “They think they made a very good buy in an up-and-coming neighborhood.”
The project has received its certificate of occupancy and will open soon, said Ghielmetti.
“We worked very closely with Signature on the build and are incredibly pleased with the finished product at Idora Apartments,” said Nick Allen, president of St. Regis Properties. “We are a Bay Area family real estate company and are very excited to be in the city of Oakland and especially in the Temescal submarket. It is a great location with a lot to offer for our residents.”
Allen did not disclose specific asking rents.
“The Apartments are built to the highest spec and quality available in Oakland and our pricing will reflect that,” Allen said.
Ghielmetti declined to disclose the development costs and said Signature made a “fair return.” A Signature affiliate bought the site for $1.4 million in 2005, according to property records.
The sale is the second deal Signature has completed with St. Regis Properties. Last year, St. Regis bought a site at 459 8th St. from Signature approved for 50 units. The project is now under construction.
Temescal is one of Oakland’s most expensive neighborhoods. The neighborhood’s median home value is $938,100, soaring 10.5 percent over the past year, according to Zillow. Oakland’s median home value is $676,900, up 9.6 percent in the past year.
Temescal has seen a smaller wave of new projects compared to the city’s downtown. Fewer sites are available, but hundreds of units are being built next to the MacArthur BART station. Two of the country’s biggest developers, Boston Properties (NYSE: BXP) and Hines, have projects at that site.
The five-story 5239 Claremont St. project was approved in 2007 but stalled during the 2008 recession. Construction started in 2015, after a building that houses the historic Kingfish Pub & Cafe was moved from the site.
KTGY is the building’s architect, and Hawk is the general contractor. No brokers were involved in the building sale.
Ghielmetti said rents in Oakland have remained flat after spiking over the last few years. “I think it’s stable,” said Ghielmetti. “I think that’s healthy for the market.”
A handful of market-rate projects have delivered a few hundred units in the past few years, including Signature’s Mason at Hive. Now, a flood of over 3,000 units are under construction.
Signature is also building 65 housing units at 23rd and Valley, near the Hive project. It is also on the verge of breaking ground on the first 241-unit building of the 3,100-unit Brooklyn Basin development, a milestone for a project in the works for over a decade.