LEAD checks into Lynn hotel


October 10, 2016
By Thomas Grillo/The Daily Item

 A global real estate team is expected to examine the need for hotel rooms as part of the city’s $650 million waterfront rebirth.

Scott Hutchinson, vice president at CBRE/New England, a commercial real estate firm in Boston, and Julie Surago, senior consultant at CBRE Hotels in New York, spoke to the Lynn Economic Advancement and Development (LEAD), the high-powered team that was formed to cut through the bureaucracy and jumpstart development.

facade of city hall in Lynn, Ma.

“It’s odd when you’re this close to an urban center and not have a hotel,” said Surago about Lynn’s lack of a hotel. “Construction of a hotel is usually a component of an overall redevelopment approach that Lynn is trying to accomplish on the waterfront.”

So far, at least three major apartment projects are planned on the waterfront including redevelopment of the former Beacon Chevrolet site that will include 348 apartments in two buildings, the 65-acre former General Electric Co. Gear Works property that will feature 1,200 apartments adjacent to the train stop, and Joseph O’Donnell’s 17-acre site on the water side of the Lynnway adjacent to the General Edwards Bridge that will include 250 units in a wood-frame, three-story building.

Among the things to be studied will be so-called demand generators, such as the potential for corporate and leisure business.

James Cowdell, executive director of the Lynn Economic Development & Industrial Corp., the city’s development agency and member of the LEAD team, acknowledged that a hotel operator floated a plan to build on the Lynnway two years ago, but it fell through.

“There has been an effort to bring a hotel to Lynn, but there has never been this level of conversation that’s taking place with CBRE,” he said. “Getting data, that would be helpful to bring hotel operators to the city because a city the size of Lynn should have hotel rooms.”

Despite the fact that there is lots of hotel construction underway and in the pipeline in Greater Boston, more rooms are needed, Hutchinson said.

Still, given land and construction costs, it can be an expensive proposition for a developer to open a new hotel. Developers typically look at a profitability metric that is calculated by occupancy times average daily rate which equals revenue per available room.

“Among the factors to be considered is demand, how many business tourists and sporting events would attract the spillover from Boston and places like Revere,” saidHutchinson.

He cited construction of a hotel at University Station in Westwood where hotel operators want to be close to transit, retail and restaurants.

“You can’t just plop a hotel down, typically, hotels are part of a mixed-use project,” Surago said. “Developers prefer to be near high-end condo and apartment development, new office space and other things to support it.”

There are other challenges in bringing a hotel or two to Lynn. The city is isolated when it comes to transportation, and demand may not have reached Lynn, Surago said.

“There’s one way in and one way out on Route 1A,” she said. Still, while there are lots of hotels in the pipeline in Greater Boston, the region is not overdeveloped and there is still surplus demand given Boston is such a difficult place to build.

“The new rooms will be pretty much absorbed at least in the next couple of years,” said Surago. “One of the things that would spur construction of a hotel is if the city is successful in developing luxury housing along the waterfront as well as mixed-use. There is an opportunity for Lynn to capitalize on all the growth in downtown Boston.”

Cowdell asked if there were any incentives the city could offer to attract hotel developers. He was told tax incentives are one way to attract developers.

Jason Denoncourt, economic development director for U.S. Rep. Seth Moulton (D-Mass.) and a member of the LEAD team, was responsible for bringing Hutchinson and Surago to the session in an effort to expand the number of out-of-town commercial real estate entities to explore opportunities in the city.   

Thomas Grillo can be reached at tgrillo@itemlive.com.

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