Rising expenses, design changes add millions to price
The 19-story Westin hotel and condo tower planned for near the foot of Lower Broadway could cost up to 60 percent more than originally estimated, an attorney for the developers said.
A rise in construction costs and design changes that were required to get approval from city authorities means building costs are likely to be between $150 million and $200 million, said James Weaver, an attorney at Waller Lansden Dortch & Davis.
Cost of the project, being developed by The Barber Group of Springdale, Ark., and Sage Hospitality Resources of Denver, was earlier estimated at $100 million to $125 million.
Brandon Rains, project manager for Barber, said the developers are analyzing contractors' estimates, doing more work on drawings and plans, and verifying costs of various aspects of the project.
"We have to make sure we're 100 percent comfortable with the real construction costs before we break ground," he said.
Under a zoning change approved by Metro Council in March that required a historic zoning overlay for Lower Broadway, the developers are restricted from changing the design of the project.
"We'll have to find a way to get construction costs for the project at a level that the economics still work," Rains said.
The project, with a 375-room hotel, 48 condos and retail and restaurant space on the street level, is expected to rise 201 feet on the block between Second and Third avenues.
Last fall, the Metro Planning Commission approved it after a lengthy debate between supporters, who touted jobs and other benefits, and preservationists worried that the structure would harm Lower Broadway's unique character.
Land deals haven't closed
The developers haven't closed on deals to buy the land needed for the project yet, including one agreement with a group that includes Nashville investment executive Billy Eskind in which the closing date has been extended twice.
"It's a pretty big project. I think they're trying to get their ducks in the row," said Eskind, who said he's been told the land sale could close in mid-November.
Rains said the developers still hope to close on the purchases and start demolition later this year. They're working to secure financing from two investment bankers, he said.
At least one competing downtown hotel developer is skeptical that the Westin's developers will secure the necessary financing, considering the recent volatility in the nation's credit markets.
"If the land purchases are not closed, and they're not already under construction, financing of those projects are more difficult to pull off," said Mark Bloom, a co-owner of the Hilton Downtown and Union Station hotels. "The cost of financing has gone up dramatically in the last three months and risky projects are more difficult to finance."
Rains said he's optimistic the Westin's developers will be able to get financial commitments from buyers for their 48 condos before construction starts, if lenders require that.
"It's obviously harder now, but we still feel confident that financing will be in place," Rains said.
Weaver, the local project's attorney, said the delay here is due in part to requirements that the structure be set back from Broadway and Second Avenue and have features such as a green roof and environmentally friendly Leadership in Energy and Environmental Design certification.
"It's a complicated building to design because of where it is and because of the requirements associated with our zoning," Weaver said.
Rains said he plans to be in Nashville on Monday. "We want to deliver a first-class project, and projects of this magnitude take time," he said.
This is from the Tennessean newspaper