New Hotel Development Proposed for Downtown Pensacola
In an exciting development for downtown Pensacola, officials from the Port of Pensacola are currently in discussions to sign a lease that would pave the way for a new 120-room hotel. This proposed project, spearheaded by Siddiqi Investments of Knoxville, Tennessee, aims to construct an "upper-midscale hotel" on a site located behind the existing Holiday Inn Express, which is also owned by the company.
Location and Property Details
The property in question is currently home to two parking lots with entrances on South Jefferson Street. Since the port technically owns this land, any lease agreement must receive approval from the Pensacola City Council. During a recent workshop meeting, Port Director Amy Miller provided the City Council with an update on the proposed lease, emphasizing that discussions are still ongoing.
The envisioned hotel would be a five-story structure featuring a 5,000-square-foot meeting space, a four-deck parking garage with 243 parking spaces, a pool, and a rooftop terrace. This development is not just about adding more rooms; it aims to enhance the overall experience for visitors and residents alike.
Lease Terms and Financial Implications
The proposed lease would span 30 years, with the potential for four additional 10-year renewal terms, allowing the hotel to remain operational for up to 70 years. Financially, the developer would pay an annual rent of $147,440 for the first five years, with a 7% increase for each subsequent five-year period. Additionally, the lease includes provisions for rent adjustments based on fair market value.
Over the first 30 years of the lease, the city is projected to earn approximately $5.2 million, which would contribute to the port’s fund. Furthermore, the port could receive a 5% share of room revenue, capped at $250,000, once the hotel generates $3.5 million in annual revenue. The port would also benefit from a 2% share of revenue from non-room sources, such as restaurant and bar sales within the hotel.
Hotel Brand and Market Considerations
Mike Mangrum, a commercial broker representing Siddiqi Investments, noted that the developers have yet to finalize the hotel brand. He mentioned that the hotel market has been relatively stagnant over the past six to eight months, but he anticipates a surge of interest from major hotel brands eager to partner with the developers.
The proposed hotel is designed as a limited-service establishment, encouraging guests to explore the nearby downtown restaurants and attractions. Mangrum highlighted the strategic choice of location, emphasizing the walkability and access to dining and entertainment options in the vicinity of Palafox Street.
Community Support and Concerns
Pensacola Mayor Grover Robinson expressed his support for the project but raised concerns about the current demand for hotels in the downtown area, particularly in light of the ongoing impacts of the coronavirus pandemic. He acknowledged that prior to COVID-19, the market seemed robust enough to support multiple hotels, but the current landscape remains uncertain.
In addition to this proposed hotel, the city is also in discussions with another developer to construct an 180-room hotel at Community Maritime Park. Robinson noted that if the lease for the new hotel is approved, it could provide funding for the execution of the Port vision plan established in 2019.
Council President Jewel Cannada-Wynn voiced her support for the project, citing a long-standing desire for a downtown convention center. She pointed out that the lack of hotel rooms has been a significant barrier to realizing this vision.
Next Steps
As discussions continue, Miller indicated that a formal lease agreement could be presented to the City Council as early as November or December, depending on the duration of legal reviews. The outcome of these negotiations could significantly impact the future of downtown Pensacola, enhancing its appeal as a destination for both tourists and business travelers.
The proposed hotel development represents a promising step forward for the city, potentially revitalizing the downtown area and contributing to its economic growth. As the talks progress, the community eagerly awaits the final decision that could shape the landscape of Pensacola for decades to come.