Big Year for Big Space

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In a hospitality landscape where hotels are offering deep discounts, the ones still in business, that is, Kelowna-based Prestige Hotels and Resorts is taking the plunge and building an oceanfront project in Sooke.

Prestige’s first venture on Vancouver Island, a $15-million project, broke ground last November and is due to open early next year, says Tanya Stroinig, vice-president of operations at Prestige. “We’ve been looking for the perfect opportunity and waterfront is key.” 

Built on a one-hectare lot overlooking Sooke Harbour, the 105,000-square-foot hotel will have 122 guest rooms, meeting space for 400 people, a restaurant and bar, day spa, bakery/cafe, lobby shop, indoor pool with hot tub, fitness centre, and outdoor gazebo. A 1,800-square-foot, fifth-floor penthouse will be sold as a private residence. Prestige got special zoning to allow the deal with an as-yet undetermined price.

That wasn’t the only special arrangement for the 16-year-old company, which has built nine hotels in the Okanagan, Rockies, and West Kootenay. To woo Prestige, Sooke municipality has become a guaranteed customer. For the first five years, it will pay Prestige $300,000 a year to use the resort conference centre for 12 days a month — that’s $25,000 per month or $2,083 for each day.

“People have been upset by the concept,” Stroinig concedes. But the goal is to draw people to the community, says Sooke chief administrative officer Evan Parliament.

Next door to the hotel, the municipality is building a public boat launch and pier. Prestige is contributing $200,000 toward this $2-million project. “The public can use our space and we’ll use the boat launch. We want to become the locals’ resort,” Stroinig says.

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Considering that established chains like Victoria’s Traveller’s Inns and luxury establishments like The Aerie are in receivership, is the timing right? “There’s always a risk with any development of this size. But we have a strong brand. The market is familiar with our brand,” Stroinig stresses.
Tourism consultant Frank Bourree agrees, calling Prestige a credible and experienced company that delivers a quality product. Besides, Sooke needs a hotel, says Bourree, principal with Victoria’s Chemistry Consulting. When sports teams and tourists come to Sooke, they won’t have to stay elsewhere. The nearest full-service hotels are 20 kilometres away in Langford. The Westin Bear Mountain is rarely full and Moe Sihota’s Four Points By Sheraton behind Costco isn’t in the most scenic location, he notes.

Chemistry’s tourism research bulletins have noted that Greater Victoria’s average hotel room occupancy rate for 2009 was 61.92 per cent. Still, he predicts that Prestige will do well in Sooke. “While it’s always somewhat of a risk building a new hotel, if you focus on the right market, consider the competition, and build at the right costs, you’ll succeed,” he says.

Others aren’t so welcoming of the resort. Many local bed and breakfasts and the high-end Sooke Harbour House aren’t enthused about Prestige’s arrival or the fact their taxes are helping to subsidize the competition. Stroinig understands but says the hotel should bring business to Sooke for everyone.

Hackles also went up over the hotel’s design — a plantation-style exterior, complete with porticoes and a circular driveway. It’s now being termed a 1920s look. “It’s an ageless design,” says William Sokol, an architectural technician with the Vernon-based firm TR Thorburn Architect. “Twenty years from now, it will still look good, not like this west coast design that doesn’t look good in 20 years.”

And palm trees, a favourite of Prestige owner Joe Huber Jr., will be planted on the property, part of the landscape design for lush grounds. “We want to do something unique for the Island,” Stroinig says.

But while many new projects incorporate LEED features, any nods towards the environment will be notably absent. Extra cost was the reason given by Sokol.

Prestige is an arm of Huber Developments, the contracting company started in the Okanagan by Josef Huber, who built numerous hotels and motels for other clients. Eventually, he realized it made sense to build and run his own hotels. Prestige acts as general contractor for its projects. It’s a similar model to Victoria-based Accent Inns, which are built by Farmer Construction. Farmer family members own the motel chain.

“We build our own hotels. It helps make us more efficient,” Stroinig says. “We have to service the hotel, maintain it.”

Room for you

If you’re looking for new first-class office space, it’s going to be a big year, as more than 300,000 square feet is in the pipeline for 2010.
Come August, the six-storey Atrium building at Blanshard and Yates Streets will open with 180,000 square feet — 70 per cent of it pre-leased to B.C. Ferry Services Inc. for its head office.

Uptown, which will be the new titleholder for the city’s biggest shopping centre, has 112,000 square feet of offices on the upper levels of the big “Main Street-style” mall. The B.C. Assessment Authority and Consumer Protection B.C. are taking about 40 per cent, according to Colliers commercial real estate.

In addition to Uptown and Atrium, a new six-storey building at 947 Fort Street will complete later this year.

It adds up to 334,200 square feet. “That’s a record,” says Bob Law, office-leasing specialist at Colliers, noting it was 2001 when Victoria last saw that much office space finished.

Uptown and other suburban expansion aside, downtown Victoria needn’t worry. The city core still has close to 60 per cent of the region’s 8.1 million square feet of office space. Still to come are five new proposed downtown office buildings totalling some 500,000 feet, says Law, although start dates aren’t firm.

At Colliers’ annual gathering, Law said the global economic crisis has been “ignored, mostly” by Victoria, although the city always lags conditions elsewhere. Office vacancy more than doubled last year, but it’s still the second lowest in Canada at 4.5 per cent. That could top seven per cent by the end of 2010. It’s not much above the long-term average vacancy rate of five to six per cent. Translation: it may bring small reductions in office rents and some bonuses to tenants but no general rental rate cuts.

Bargain-hunting conditions are better in the retail space market. Shopping centre vacancy increased a full percentage point to 2.1 per cent and will rise further this year with the equivalent of a whole Bay Centre of new retail space opening at Uptown. Expect “downward pressure” on store rents.

Street-level retail vacancy downtown increased to 3.5 per cent from 2.7 per cent. Optimists point to the new condo buildings that are putting more residents in the core.