Browse Category: Hotel

Palmer House, Thor Equities Snag Refi

The Palmer House Hilton

One of Chicago’s most storied hotel properties has carried on its legacy – by borrowing again.

The Palmer House Hilton, located at State and Monroe in downtown Chicago first opened in 1871 only to burn down two weeks later in the Great Chicago Fire. Builder Potter Palmer immediately secured a loan to rebuild – $1.7 million in what was considered at the time to be the largest individual loan ever.  It was built again.

This week, 143 years later, the venerable property went again to the financing well, albeit in somewhat greater volume.  In a refinancing deal announced this week, the property traded in its $365 million debt for a lower- and floating-rate $420 million debt as reports:

The deal brought together Thor Equity Partners, a bond issue / CMBS loan by Morgan Stanley (five years floating rate) and Jones Lang Lasalle who represented the equity firm.

Bust: One Third Of Atlantic City’s Gaming Space Lost In 2014

English: Revel in Atlantic City

Capping a wave of casino closures on the Atlantic City boardwalk is Revel, the $2.4 billion, 47-story hotel tower that debuted in April 2012. The September shutdown of the starkly designed gambling palace hits the New Jersey economy hard, contributing to closures that take away about one third of AC’s gaming space.

What changed to turn AC’s multi-decade run as a gaming mecca into a parade of glittering vacancies?  Some point to Pennsylvania, whose recent expansions to gaming laws are keeping its players in its own state to play at standalone casinos such as Mount Airy, Sands, Rivers and SugarHouse.

Others suggest that the younger gaming customer tends to be a poker player, and Revel does not offer poker. As the NYT writes:

Internet gambling, which became legal in New Jersey last year, so far has not been a significant threat to the casinos. After initially forecasting that online betting could increase industry revenue by $1.2 billion in the first year, state officials sharply revised down forecasts for both revenue and expected tax receipts, which were scaled back to $34 million from $180 million.

“It hasn’t come close to what their projections were,” said Anthony S. Graziano Sr., executive director in the Coastal New Jersey office of Integra Realty Resources, a national real estate valuation firm.

Competition from out of state, especially in Pennsylvania, has been the main threat in Atlantic City, overshadowing any issues from the recession or Hurricane Sandy in 2012. Customers in eastern Pennsylvania now have a choice of gambling halls in Philadelphia, Bethlehem, Chester or Valley Forge, removing the need to drive an hour or more out of state.


Commercial Real Estate Industry Weekly Roundup

Roundin’ Up The News

Patrolling the media for the latest in commercial real estate news, it’s the Commercial Real Estate Industry Weekly Roundup:



Office Sector

Industrial Sector

Retail Sector

Multifamily Sector

Hotel Sector

Land Sector

Dolly Parton, Developer: Working Considerably Longer Than 9 To 5


Dolly Parton 2006

Music icon, philanthropist, actress  and author Dolly Parton’s business acumen is legendary. Co-owner of Dollywood, the eastern Tennessee theme park that sees nearly three million visitors each season and keeps 3,000 people on the largest payroll in the county, Dolly’s long been known as an economic powerhouse with vision and drive.

Her 2012 announcement that she would be in partnership with Gaylord Entertainment to build a water park next to a Gaylord hotel property in Nashville seemed like more canny business sense. It would have been Dolly’s second such park, the first having opened in 2001 near her childhood home of Sieverville.  But not all was smooth sailing for the announced project.

In September of last year, Parton announced she would be pulling out of the water park project. The reason: her business partner had decided to get out of the hotel management business, selling those assets to Marriott,  and get into pure real estate holding.

Dolly Parton said Friday afternoon that her Dollywood company will not take part in the development of a planned water/snow park near the Gaylord Opryland Resort & Convention Center.

Citing Gaylord Entertainment’s upcoming departure from the hotel management business and conversion to a real estate investment trust, Parton said she had appreciated the cooperation of local and state government officials on the planned $50 million project but added that she needed to move on.

“Gaylord makes decisions that they feel are good for their company and their stockholders and I have to make decisions based on what is best for me and the Dollywood Company,” she said. “I think everyone knows I love Nashville and I hope the work we’ve already done will spark more family entertainment in Nashville.”

The demise of the water/snow park had seemed in the offing six weeks ago, when Parton said plans were in a holding pattern because of Gaylord’s agreement to sell its hotels brand and management to Marriott International for $210 million. Gaylord officials quickly countered to say they were still on board, but have since pulled the plug on from-the-ground-up development projects in Arizona and Colorado, saying their new REIT will focus on buying completed properties.

Months after breaking up with Gaylord and the Nashville project with its central Tenessee location, Dolly once again took it back home to her childhood haunt of Pigeon Forge, TN in the eastern side of The Volunteer State.  In this case, “it” is  a 100-acre, 300 room resort called DreamMore – named after her 2012 book of the same name.

Located just a stone’s throw from Dollywood, the 300-room Dollywood’s DreamMore Resort will sit on 100 acres and offer views of the Smoky Mountains. Centered on the rich traditions of storytelling, family and togetherness, the resort will feature many special touches including family sanctuaries like fire pits, swings, and hammocks plus story spots scattered throughout the grounds.

Showcasing design features and décor elements that celebrate the area’s natural beauty, DreamMore will offer an indoor and outdoor resort pool complex, a spa, and a full-service farmhouse-style restaurant. With an emphasis on encouraging family bonding time, the resort also features a family activities center where guests can secure reservations for a variety of adventures centered around wholesome fun, including hikes in neighboring Great Smoky Mountains National Park.

Dollywood’s DreamMore Resort is the second capital investment in a 10-year plan that includes more $300 million in future developments for Parton’s Dollywood properties. DreamMore Resort joins Dollywood Cabins as the company’s second venture in the lodging industry. Launched in 2010, Dollywood Cabins offers cabins two miles from Dollywood and Dollywood’s Splash Country.

There she comes again.

(Photo credit: Alejo Castillo)



Retail And Office Mood-Makers Muzak To Get New Name


Technology’s power to reshape commercial property operations has been at work for decades.  We observe the waves of change in e-commerce as if nothing similar had ever happened before, but the fact is that the electronic era has constantly produced new realities for the commercial property industry to adopt,  adapt or ignore at its peril.

The idea that background music of a certain tone adds value to retail and office spaces is an old and proven one.   When I saw that Muzak, the company most identified with providing that element is changing its tune, ditching its 79 year-old name, I looked into the company’s history and found a mix of commercial psychology, marketing and music that we take for granted in any store or office walkthrough today.


Technological Upheaval, 1920s-Style

In the 1930s, Muzak grew from a 1922  patent on delivering music into buildings across electrical power lines.  The company was a cutting-edge technological marvel in its heyday, and property owners lined up to order the service, at first out of novelty then later in a bid to understand and affect the psychological states of the shopper, the worker, the visitor.  The commercial property industry terminology for this is “performance”, a measure of economic productivity value generated per square foot, value needed to offset (at least) or dwarf (at best) all the costs  that space presents.

Muzak Becomes Mood

As reported by New York Times Ben Sisario, the psychology of mood and the economics of retail grew into a huge business.  And that Muzak, the iconic brand of that ambient, pleasant hey-stick-around-it’s-nice-in-here audio programming was taking on a new more direct name:  Mood.

Mood Media, based in Concord, Ontario, has become a leader in so-called sensory marketing, providing stores and other businesses the sights, sounds and even smells to envelop their customers. In addition to Muzak, which it bought two years ago for $345 million, Mood has divisions for signs, interactive displays and scents, which it says reach 150 million people each day at more than 500,000 locations around the world, from Saks Fifth Avenue to Petco.

On Tuesday, the company will announce that it is consolidating its services under a single brand, Mood, thus eliminating the Muzak name.

“It’s the end of an iconic American brand,” said Lorne Abony, Mood Media’s chairman and chief executive.

The move reflects the growing sophistication of in-store services, as well as the pressures facing physical retailers in the Internet age. At Mood’s interactive kiosks, for example, shoppers can try on clothes virtually, while the company pipes in upbeat songs and scents intended to set a mood or cover up unpleasant odors.

“There’s a huge opportunity and a need for physical retailers to make the experience more interactive as they do battle against online channels,” said Edward S. Williams, a digital entertainment analyst at BMO Capital Markets in New York.

Property managers and tenants will tell you the devil is in the details — small factors such as ambience add up to the performance of a property.  Until the numbers tell the ambient music industry otherwise, expect to keep hearing lite versions of pop tunes in the successful retail and office spaces.

Entire NYT Article.


(Photo credit: jplpagan)




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Modular Construction: New Commercial Property Applications

(Photo credit: psd)

If there’s one common thread to the huge number of different technological changes roiling commercial real estate, it’s standardization.  Standardization looks for ways to treat different things in the same way, and build efficiencies as a result.  Standardization is behind all the software tools we use and increasingly depend upon – the web, your desktop, your phone, all need to run the application you need.  The listings data you depend upon has to meet certain standardized criteria or it won’t publish.  In finance, standardization of debt instruments gives us CMBS and other tools to increase credit and liquidity (sometimes too much!)

Standardization is also the enabler behind prefab (aka modular) construction.  Long a fixture in single-family residential, the practice of assembling major building components off-site has not been as historically popular in commercial construction projects, accounting for only 1% of US building market, generally limited to schools, hospitals, dormitories and some retail stores.  But that is changing as technology continues its inexorable march and commercial property developers look to squeeze every dime until it hollers.

The trade group Modular Building Institute says the market in modular construction for commercial buldings is set to increase over the next five years.  I took a look at hotels and data centers and found trends that support this idea.


This neat animated video walk-through of a single hotel project utilizing modular construction techniques, details various measures of efficiency for construction schedules as the project gets built (mostly under a factory roof, down to the floor tile and wall treatments.)

Data Centers

Customization – the mortal enemy of standardization – is costly in the building of data centers.  It is falling by the wayside in the provisioning of multi-tenant data centers (MTDC) that rely on standardization of space along with its critical cooling, access and power requirements.  These packaging techniques for space afford tenants the ability to scale their square footage as their growth demands  — as opposed to the maximum that the landlord would traditionally prefer to rent.

The prefabricated, modular data center promises to have a major impact on the economics and technology of this still-nascent commercial property industry.  For all the same reasons that prefab is attractive elsewhere — efficiency, cost control, and the avbility to leverage real-world business metrics in space provisioning.

An excellent white paper detailing the impacts of prefab construction and provisioning is “Data Center 2.0: The Industrial Evolution”, provided by data center vendor IO.  Download the full paper here.