Are Apt. Tenants Doubling Up Again?

By Carrie Rossenfeld

Wilhelm Headshot 2

ORANGE COUNTY, CA—We saw it during the recession out of sheer necessity, but industry experts say now we’re seeing it for a different reason: apartment dwellers doubling and tripling up within the same unit in Orange County. Bill Wilhelm, president of R.D. Olson Construction, tells that during the downturn, the poor economy and suffering housing sector were to blame, but today it’s because rental rates are rising—particularly in the apartment communities with state-of-the-art common amenities—and tenants are willing to sacrifice some space and privacy in order to live affordably in these communities.

Breaking down the cost of living in a class-A apartment among two or three individuals allows them to live in a nicer property that goes for a higher per-month rental rate, says Wilhelm. “We’re also seeing it in student housing. Where we used to see two or three individuals in an apartment, we have a property that has four or even six beds in some rooms. They’re stacking beds to be able to fit more tenants.”

The solution works with newer, higher-quality properties, but some class-B landlords are finding that tenants still aren’t biting, says Wilhelm. “In some situations, landlords have not been able to get the rates they thought they were going to get. From a renovation/construction standpoint, we’ve seen a couple of projects where the developers were trying to raise rents by $500 to $1,000 a month and add amenities. But the older buildings aren’t able to pull that off.”

Even in some of the more exclusive regions of Orange County, like Newport Beach and Costa Mesa, simply adding amenities to older buildings is not enough for tenants to justify the higher rents, says Wilhelm. “If the property doesn’t have enough characteristics to feed what tenants are lolling for today, it’s too costly to do a renovation and upgrade.”

When will the multifamily-unit bubble burst, he asks? “There are different statistics, even across the board. Some individuals think we’re there, others think we have a little ways to go and others think we have a long way to go. It comes back to geographic location."

It’s too early in the game to know if the doubling-up trend will impact multifamily design, Wilhelm adds. “I don’t think there are enough studies to try to answer that yet. If you increase unit size, is the market going to allow you to charge more? On the flip side, you can keep the same size units and make the bedrooms a little larger, but shrink down some of the living areas. But you don’t really want to go there because that’s what’s selling. Lifestyle living is what people are looking for today.”

Apartment Features are Dependent on Geography

By Carrie Rossenfeld

IWilhelm Headshot 2RVINE, CA—Not every apartment amenity will work in every submarket, so it’s important to know your audience before incorporating features into new buildings, says Bill Wilhelm, president of R.D. Olson Construction. As reported last week, the firm recently completed extensive renovations on 27 Seventy Five Apts., a 468-unit garden-style apartment community in Costa Mesa, CA, owned by UDR Inc., in addition to several upscale recreation buildings for the Rancho Mission Viejo Co. in its master-planned communities Sendero and Gavilan in Rancho Mission Viejo, CA. We sat down with Wilhelm to discuss the evolution of these amenities and what developers need to know about the latest apartment features. Which came first regarding the demand for the high-style, high-function amenities you’ve incorporated into these properties? Did developers begin to offer them, so the market caught on and began to demand them? Or did residents begin to ask for these amenities on their own, and developers began to listen?

Wilhelm: The market has had a need for some time now for a change in design amenities. We realized that we developers need to start listening to our tenants. Who is the end user? Who is our client? What is their need today vs. yesterday, and what can we offer them I our locations? At Rancho Mission Viejo, which is geared toward an older resident, we have different amenities than at 27 Seventy Five Apts., which appeals to the younger generation. The younger group wants an indoor/outdoor environment, nice cabanas, fire pits, large-screen TVs, and an exterior nightclub kind of feel. This drives up the rental cost, but renters in their early 30s who want to go to a wild place are willing to spend an extra $500 to $1,000 a month knowing they’ll have those amenities. That’s money that would have been spent elsewhere, but now they don’t have to. That’s a good point—how are these high-end amenities affecting rental rates or buy-in costs for residents?

Wilhelm: What we are seeing is what the nicer amenities are doing. They’re taking an older existing property that might be a C property and moving it up into the B+ range, or maybe even an A+ range. The cost increase is based on location: in Silicon Valley, renters may expect to pay $1,000 to $2,000 a month extra, but in Orange County that will be less in some properties. In the Orange County rental market, the Irvine Co. has done a phenomenal job with gorgeous properties, but they get higher rents on the outskirts of the market because of what they offer. It justifies the value.

It can work the opposite way, too. I’ve seen a couple of deals where a property was bought and the renovation process was completed with the expectation that it would drive up the rental rates, only to find that it’s not always so. It depends on the zip code. Developers have gone through a learning curve and seen that geography plays a major role. What’s next in the evolution of amenities?


Wilhelm: A year ago, I probably would have said having a cocktail bar in a public area was next, but we now have that at Rancho Mission Viejo. That, to me, was really going outside the box. I think amenities continue to be driven by guest needs. We go through this with the hospitality industry: Where are the Millennials going to take us?

Culture may also have a little bit of play in this. It also depends on what kind of expendable dollars residents have. Can they afford more of a resort environment? It’s definitely going to that degree today. In the future, it may mean a spa treatment.

I think every property needs to be conscientious about who its tenants are, what cultures they come from and what things people from different cultures are looking for. We have experienced that considerably on the hospitality side of the fence from the perspective of investors, travelers and local citizens, having to make a change with cultural considerations. Does it often happen that the hospitality market leads the other market sectors?

Wilhelm: It kind of goes in cycles. In the trend we’re going through today, multifamily probably took the initial lead because as unemployment goes down and people make more money, they don’t go out and buy a home, but spend more on rent. That’s what started the process. Hotels were right behind as people began to travel more. And there again, that’s geographic—there might be very little happening in one neck of the woods, but further south or west, you’d be amazed at the amount of development going on right now. Amenities are also driving single-family housing, and there’s the community engagement by the office sector, too.

How Residents Raise the Bar on Amenities

By Carrie Rossenfeld

Outdoor amenities are a huge draw for 27 Seventy Five Apts.

Residents of all ages are demanding high-style, high-function common amenities, according to R.D. Olson Construction. The firm recently completed extensive renovations on 27 Seventy Five Apts., a 468-unit garden-style apartment community in Costa Mesa, CA, owned by UDR Inc., in addition to several upscale recreation buildings for the Rancho Mission Viejo Co. in its master-planned communities Sendero and Gavilan in Rancho Mission Viejo, CA.

The 27 Seventy Five Apts., for which the locally based construction firm has served as general contractor, has been repositioned with contemporary upgrades and features. All apartment units and exteriors at the project have been renovated, infrastructure and amenities throughout have been upgraded, and the firm has also built a new, 14,000-square-foot community building and reconstructed the 3-acre lake that functions as the centerpiece of the community. Peak West Development served as construction manager for the project.

According to Bill Wilhelm, president of R.D. Olson Construction, “This project’s combination of construction and renovation elements, along with the need to complete the work while keeping the complex operational for residents, were challenges that our team was able to tackle head on. The result is a modern, amenity-rich apartment community that will suit the needs of the next generation of residents.”

 The updated apartments feature sleek, open living spaces with contemporary lighting, modern kitchens, luxurious bathrooms and ample windows. Community amenities include upgraded eco-friendly landscaping, lighted sport courts, a pool and outdoor lounges and grills. The newly constructed community building features a rooftop lounge, game room, conference and business centers, fitness facilities and a great room with a fireplace. The project was designed by Costa Mesa-based Newman Garrison + Partners.

 At Rancho Mission Viejo, R.D. Olson has completed four recreation buildings: Hacienda, Ranch House, Guest House and the Outpost. The 11,000-square-foot Hacienda caters to senior adults and includes a luxurious great room with bar, yoga studio and fitness center, outdoor cabanas and bocce courts. Ranch House is a 5,400-square-foot clubhouse that features an exercise room, pool, spa and water-play area for kids. The 5,800-square-foot Guest House includes a community room and full catering kitchen for residents; the OThe Outpost clubhouse at Rancho Mission Viejo features a pool and spa, complete with a bar, outdoor cabanas and bocce courts, as well as a barbecue and hammock area.utpost, a 2,200-square-foot clubhouse, features a pool and spa, complete with a bar, outdoor cabanas and bocce courts, as well as a barbecue and hammock areas. was unable to reach Wilhelm prior to deadline to discuss the evolution of high-style amenities for residents, but stay tuned for an upcoming interview with him in which we explore the subject more deeply.

Listening to residents in order to understand their needs and wants is crucial in commercial real estate development. As reported earlier this month, understanding what each community needs and what their unique challenges are is key to a successful planning, according to Brian Judd, principal of design, planning and environmental firm PlaceWorks.

California Real Estate Icons

by Kristian Seemeyer

It’s one of the bigReal Estate Forum - June 2014gest states in the country and the centerpiece of the West Coast. In a market as large and varied as California, it’s only fitting that the state’s commercial real estate leaders are also larger than life. The next few pages feature some of the individuals who have helped to shape the Golden State’s CRE market, from Del Norte and San Francisco to Imperial and San Diego.

RobertReal Estate Forum - June 2014 Olson is founder, CEO and president of R.D. Olson Development and founder and CEO of R.D. Olson Construction. Based in Irvine, his firms represent more than three decades of experience in development and construction.  Recognized as leaders in developing and constructing hotels, the companies’ experience encompasses office, retail, multifamily and recreational projects. Olson guides the strategic vision for R.D. Olson with an active, hands-on approach toward every facet of construction and development. The firms’ development and construction projects span the continental US and Hawaii, and the client list includes Marriott, Kimpton Hotel & Restaurant Group, Starwood Lodging, UDR and Affirmed Housing Group, among others. R.D. Olson Development was most recently named Developer of the Year by Marriott International and both firms were recognized with the ICON Award from Marriott’s Architecture and Construction Division.

Read full article here: REForum June 2014 CA Icons

Hotel Construction, Remodeling in High Gear

By Kari HamanakaCourtyard by Marriott Anaheim

Dirt’s turning at a rapid clip for Orange County’s hotel landscape, and there may be no other local company that reflects that activity more than R.D. Olson Construction. 

The Irvine-based construction company founded and headed by Bob Olson—also chief executive of R.D. Olson Development— is nearing completion on a 210-room Courtyard by Marriott at the Irvine Spectrum.  The company is also working on another Courtyard by Marriott, this one with 221 rooms, in Anaheim. And it’s scheduled to break ground in June on a 250-room hotel at the Pacific City mixed-use project in Huntington Beach. 

Last week, it appointed Bill Wilhelm, former executive vice president, to take on president duties in a move reflecting its growing construction business. He now oversees hotel projects, among other activities.

But it’s not just R.D. Olson that’s building in the hospitality segment. 

The long-awaited Great Wolf Lodge broke ground last week on a water park and hotel in Garden Grove near the  Disneyland Resort that’s expected to add 600 rooms to Orange County’s hotel supply. 

The project “is a huge testament to the strength of the OC market,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, a real estate broker and consultant.  And earlier this month, DKN Hotels of Irvine announced the opening of a 120-room SpringHill Suites in Anaheim.

Improvement projects also continue. The 335-room Wyndham Irvine-Orange County Airport recently announced the completion of its multimillion-dollar renovation that included updated guest rooms with new bedding and redesigned bathrooms, and a refreshed lobby and fitness center.

The 485-room Irvine Marriott announced the completion of its $5 million lobby and lounge area makeover in February. The hotel, under Bethesda, Md.-based parent Marriott International Inc., wanted to make the brand relevant to a new generation of travelers looking for more contemporary settings and options in how they use the hotel to dine, relax or hold business meetings. 

The project is also at the heart of a push to create a more downtown feel for the hotel to act as a community gathering place for not just travelers but also residents and workers
in the surrounding area, General Manager Scott McCoy told the Business Journal earlier this year.

Irvine Marriott is expected to begin renovation work on guest rooms next year—the final phase of a three-year improvement project expected to cost $12 million to $13 million.

Reay said activity for the hospitality sector is picking up when compared to the recession period. 

“The market is back, and it’s back very, very strong. Revenue per available room is approaching an all-time high in Orange County, and we’ve had very, very little new supply; so I think that we’re going to see more hotel rooms being constructed just because values are reaching such a point that it makes sense for people to begin building again.”

Few of the county’s construction and renovation projects are reflected on this week’s Business Journal list of the largest hotels in Orange County, which cuts off with No. 50,
the 250-room Crowne Plaza Fullerton-Anaheim.

The largest hotels here combined for a workforce of 13,654 local employees.  That’s roughly flat compared to the year-ago period. 

Changes in worker counts were slight, with the largest worker decline at No. 6, Hotel Irvine Jamboree Center, formerly the Hyatt Regency Irvine, which shed 55 people over the 12-month period. However, the shift resulted from the hotel’s  transition from a major brand to a boutique property late last year. 

Most of the former Hyatt Regency employees stayed on with Hotel Irvine, but some chose to stay with the Hyatt company, an Irvine Company spokesperson said.

The hotel building rush is on in O.C. and L.A.

by Mary Ann Milbourn

Bob Olson doesn’t have a crystal ball about the timing of new hotels, but he may have something even better – 35 years of hard-won experience in the construction and development business.

Since 1979, when he started R.D. Olson Construction, Olson has been through every recession, every construction boom and every bust. He learned to see the telltale signs of recovery when everyone else was looking the other way.

So in 2010, as the hotel industry retreated into survival mode, Olson landed his first new project since cutting his pipeline in 2006 in advance of the recession. It was a Courtyard by Marriott in Oceanside.

“Truth be told, a lot of people thought it was the wrong move,” Olson said. But hotels have a 2 1/2-year lead time, and “I thought the economy would turn.”

Bob Olson at Courtyard Irvine SpectrumIn 2012, when the industry was just beginning to ramp up again, Olson completed four hotels, followed by seven in 2013. It was the beginning of an industry rush. Altogether, 20 hotel projects are in the pipeline in Orange County and 42 in Los Angeles, according to STR, a hotel industry research firm. That is the most local hotels underway since 2009.

Current projects on the drawing board include:

• The new Grand Wilshire Hotel in Los Angeles. A mixed-use office, retail and hotel project, the 73-story, 900-room development is being touted a s the largest building west of the Mississippi River.
• In Anaheim, 14 hotels are in various stages of planning and construction. A 120-suite Springhill Suites by Marriott opened March 1.
• Olson is putting finishing touches on the eight-story, 210-room Courtyard by Marriott in the Irvine Spectrum, due to open in June.
• Olson plans to break ground in June on the eight-story, 250-room Pacific City Hotel in Huntington Beach. It should open in 2016.
• Olson was just selected to build the Lido House Hotel, a boutique property on the site of the former Newport Beach civic center that’s in the early stages of planning.

Courtyard Irvine SpectrumThis kind of building frenzy typically has marked a peak in the past, with the industry soon after finding itself with a glut of rooms.

Jan Freitag, a senior executive at STR, cited a quote by the late hotel developer John Q. Hammons about the industry’s tendency to rationalize why there isn’t an oversupply: “The industry isn’t overbuilt, it’s underdemolished.”

But even with all the construction underway, hotel demand nationwide appears to be ahead of supply for the next year or two, Freitag said.

STR data show new-room supply is expected to increase 1.2 percent this year and 1.6 percent in 2015. The supply average over the past 25 years is 1.9 percent.

By STR’s count, U.S. room demand is expected to continue to outstrip supply, increasing 2.3 percent this year and 2.1 percent in 2015.

“If the American economy grows and GDP grows and unemployment declines, room demand is going to continue to increase,” Freitag said.

Alan X. Reay, an Irvine hotel consultant and broker, noted the industry fell far behind demand over the past five years. He said there also are some built-in market constraints in Southern California, including lack of available land and financing, as well as regulatory hurdles.

With hotel values increasing – Atlas reported a 37.6 percent increase in the total dollar volume of Southern California sales last year – and the average hotel property now 30 years old, Reay said, there is also more interest in tearing down properties and rebuilding from the ground up, which will replace existing rooms.

Kory Kramer of Irvine-based Pacific Hospitality Group, which is in a joint venture with Olson to develop and operate the Pacific City Hotel, thinks a distinction needs to be made between four-diamond luxury hotels like the one in Huntington Beach and select service properties like Courtyards by Marriott and Residence Inns. Select service properties provide limited service and include extended-stay and all-suite hotels.

The Pacific City Hotel, a project that was eight years in the making, will cater to a different business and leisure clientele that demands first-class service and amenities.

Pacific City HotelEvery room will have an ocean view and the latest in Wi-Fi and television technology. The hotel will feature a top-of-the-line spa and fitness center, an outdoor courtyard with water features and fire pits, one of the largest ballrooms in Orange County, which will open out to an oceanfront event lawn, and a rooftop restaurant and bar overlooking the ocean.

It will be part of Pacific Hospitality’s Meritage Collection of upscale properties, which includes the Estancia La Jolla Hotel & Spa, the Balboa Bay Resort, the Bacara Resort & Spa in Santa Barbara and The Meritage Resort and Spa in Napa.

Because few coastal sites are left to be developed, Kramer said, Pacific City is the only four-diamond luxury, ocean-view hotel project currently planned on the California coast.

“It’s the preeminent principle of real estate – it’s all about location,” Kramer said.

5 new hotel must-haves

Courtyard Irvine SpectrumTechnology, lifestyles and changing guest tastes mean hotel builders have to consider a whole new range of amenities at their properties. Here's R.D. Olson founder Bob Olson's guide to five hotel essentials:

• Wi-Fi: You can't just have Wi-Fi, it has to be free and fast.

• Guest space: A big desk against a wall doesn't work in the laptop age. You need flexible furniture that allows you to work anywhere – on your lap, on the couch or in bed.

• Plug-ins: The average guest has three electronic devices so you need plugs-ins throughout the room.

• Social areas: Call it the Starbucks syndrome. People don't want to stay in their rooms. Lounge areas now have media pods and other spaces where people can have interviews or work together or where guests sit alone but hang out among people.

• Fitness activities: A treadmill and a few free weights won't do anymore. Guests expect the latest, like CrossFit equipment.

Office building near LAX to be converted to Marriott-brand hotel

by Roger Vincent

R.D. Olson Construction is commencing construction on a $44.5 million hotel project, the Residence Inn by Marriott at Los Angeles International Airport (LAX) in Los Angeles, Calif. The general contractor was chosen by new owners, SVI LAX to convert the 12-story office building to a 231-room, extended stay hotel.

The new hotel will feature the Residence Inn by Marriott’s latest Generation 9 design, with guest amenities that include a pool, spa, fire pit, sports court, exercise room, business center and meeting space. The hotel entrance will include a backlit, free-flowing sphere porte cochère to welcome guests. The new Residence Inn will also feature 3,000 square feet of retail and restaurant space.

“Complex construction projects like this office-to-hotel conversion give R.D. Olson the opportunity to put our diverse construction experience and hotel industry expertise to great use,” said Bill Wilhelm, executive vice president of R.D. Olson Construction. The project is slated for completion in January 2015.

R.D. Olson has constructed over 1,000 hotel rooms in the Southern California market over the past three years. The firm most recently broke ground on the 170-room SpringHill Suites by Marriott in Downtown Burbank, Calif. R.D. Olson is also currently collaborating with Marriott International on a 210-room Courtyard by Marriott in the Irvine Spectrum Center.

R.D. Olson Continues Hotel Streak with New $44 Million Marriott

By California Views

R.D. Olson Construction has been busy lately. This is especially true in Los Angeles county, where the Irvine, CA-based general contractor has recently promoted three project executives to help with a series of new hotel projects underway. Highlighting this construction onslaught is the new $44 million SpringHill Suites by Marriott in the city Burbank.

As part of the city's Downtown Revitalization plan, the new five-story,170-room hotel will feature an interior design theme that pays homage to the area's rich history in the entertainment industry. When construction is complete in spring 2015, R.D. Olson Development will retain ownership of the hotel, while Marriott International will provide management services.

The 102,075-sq-ft, all-suite hotel was designed by San Diego-based Awbrey Cook McGill Architects and features Marriott's latest Gen 4.5 design for SpringHill Suites and will meet the needs of weekday business travelers and weekend leisure guests in a sleek, contemporary setting. The hotel is designed with a room mix that includes 88 king bed and 82 double queen bed configurations.

Guestroom suites will boast dedicated work spaces with a full-sized desk, free Wi-Fi, separate seating area, kitchenettes with microwaves, mini-fridges and coffee service, and bathrooms equipped with separate showers and bathtubs. Public amenities in the hotel include a breakfast area, lounge, meeting facilities, a fitness center, business center, guest laundry and an onsite convenience market. Outdoor amenities include a beautifully landscaped outdoor space with a fire pit and an inviting pool and spa area.

The project marks R.D. Olson's second Marriott brand development in Burbank. The firm also developed the 166-room Residence Inn by Marriott Burbank in 2007. The hotel is expected to add approximately 50 full- and part-time employees and average $920,000 in transient occupancy tax annually over the next ten years.

The company also has a $50-million, eight-story Courtyard by Marriott currently in construction at the Irvine Spectrum in Irvine. Designed by international architecture firm WATG, the 210-room will contain a lap pool, spa area, 1,500-sq-ft fitness center, lounge area and bar, guest laundry, 8,500 sq-ft of meeting space and a convenience market. The 131,667-sq-ft hotel is scheduled for completion this July 2014.

Another new hotel on R.D. Olson's docket is the $45 million Bicycle Casino Hotel in Bell Gardens, a few miles south of Downtown LA. Scheduled to break ground next month the 100-room, seven-story, luxury hotel will feature more than 15,000 sq-ft of meeting and event space, a bakery/cafe, restaurant, penthouse nightclub, roof-top open air gaming area, health spa, fitness center and a second floor elevated swimming pool with cabanas.

Officials say the 117,907-sq-ft hotel will create approximately 300 construction-related jobs in a community that is currently experiencing 16.3 percent unemployment. Construction is planned for completion the first quarter of 2015.

The increase in construction activity for the company has prompted the recent promotion of three project executives: Matthew Grubb, Tommy Marcum and John Ramirez. The three men "exhibit the breadth of experience, talent and focused energy that is crucial to the role of project executive,” said Bob Olson, founder and chief executive officer of R.D. Olson Construction in a news release.

R.D. Olson Construction at Forefront of Hotel Construction in California

By Staff

R.D. Olson Construction is announcing new activity on numerous projects in Los Angeles, Orange and Riverside Counties, continuing its leadership in the California hotel construction industry. Increased activity in 2014 includes the addition of over 1,120 hotel rooms statewide and marks continued growth in the hotel industry for the Irvine, Calif.-based general contractor. Current and new projects include a range of both ground-up construction and renovation work.

“We are excited about our current and upcoming hotel projects and the growth that our company and Southern California have seen in the market,” said Bob Olson, founder and chief executive officer of R.D. Olson Construction.

With the construction of several hotel projects already underway, R.D. Olson also has numerous ventures planned for 2014, including five ground-up hotel construction projects and three hotel renovations.

Courtyard by Marriott Irvine Spectrum
R.D. Olson Construction is underway on the construction of the Courtyard by Marriott Irvine Spectrum in Irvine, Calif. The project features a host of above-standard amenities for the Courtyard concept, and is located within a short walk to the abundant retail amenities available at Irvine Spectrum. Enlisted by Irvine Center SPE, LLC the 210-room hotel is slated for completion by July 2014.

Courtyard by Marriott San Jose
San Diego-based Win Time Hotels enlisted R.D. Olson Construction to construct the Courtyard by Marriott in San Jose, Calif. The 157-room hotel is scheduled to be completed in January 2014.

Palm Desert Timeshares
R.D. Olson is currently constructing 32-timeshare villas in Palm Desert, Calif. The one- and two-bedroom villas feature full kitchens and dining areas. Construction is scheduled to be completed in late 2014.

SpringHill Suites by Marriott Burbank
549 San Fernando SPE, LLC engaged R.D. Olson to construct the new, 170-room SpringHill Suites by Marriott in Burbank, Calif. Construction is set to begin during the first quarter of 2014.

Courtyard by Marriott Anaheim
R.D. Olson will begin construction on a ground up 220-room Courtyard by Marriott in Anaheim, Calif. in March 2014.

Marriott Residence Inn Pasadena
Pasadena at Fair Oaks Real Estate, LLC, has engaged R.D. Olson Construction to build a 144-room Marriott Residence Inn, located in the heart of historic Old Town in Pasadena, Calif.

Hampton Inn Glendale
R.D. Olson Construction is working with Vista Investments to construct a new Hampton Inn in Glendale, Calif. The 94-room project is set to begin in spring of 2014.

Bicycle Casino Hotel Bell Gardens
R.D. Olson starts construction in March 2014 on a $45 million luxury hotel project, The Bicycle Casino Hotel in Bell Gardens, Calif. The 100-room, seven-story, 117,907-square-foot hotel will feature more than 15,000 square feet of meeting and event space, a bakery/cafe, restaurant, penthouse nightclub, roof-top open air gaming area, health spa, fitness center and a second floor elevated swimming pool with cabanas.

Hotel MdR in Marina del Rey
Los Angeles-based Channel West Group selected R.D. Olson to convert the 283-room Courtyard by Marriott in Marina del Rey, Calif. to a Doubletree by Hilton, a project currently under renovation. The project includes renovations to the exterior facade, lobby, restaurant, pool deck, guestrooms and suites. The hotel will remain open throughout construction.

Sheraton Gateway Los Angeles Hotel
R.D. Olson Construction was chosen by new owners, Hazen’s Real Estate Group, to refresh the Sheraton Gateway Los Angeles Hotel at Los Angeles International Airport. Plans call for the renovation of 804 guest room suites, as well as the lobby and dining areas; and will require R. D. Olson to work around various functions while the hotel remains open.

Marriott Residence Inn LAX
Additional work near Los Angeles International Airport includes the conversion of a 12-story office building into a 231-room Marriott Residence Inn. R.D. Olson expects to begin work in March 2014.

The Anza Hotel Calabasas
R.D. Olson’s upcoming hotel renovation work also includes a project at The Anza Hotel, located in Calabasas, Calif. The project is expected to be completed in early 2014.

“Hotel construction and renovation are the strongholds of our business. We are looking forward to bringing our expertise and experience to new projects as the hospitality sector continues to expand in 2014,” said Olson.

2014 Preview: HOTELS & TOURISM

By Kari Hamananka

Residence Inn TustinIt should be a healthy year for Orange County hotels.

Occupancy is already running strong here, and industry researcher PKF Consulting USA LLC is looking for average room rates to grow between 4% and 5% next year.

“Overall, the market should be good,” said PKF Senior Vice President Bruce Baltin, in the firm’s Los Angeles office. “The market’s running at capacity in occupancy, and so there should be revenue growth next year.”

OC’s supply grew this year after the dry spell of the recession.

R.D. Olson Construction’s 149-room Residence Inn & Suites and 145-room Fairfield Inn & Suites both opened this summer at the developer’s mixed-use project, the Tustin Pacific Center.

Two SpringHill Suites—a 172-room property and a 120-room property—are expected to open in the summer in Anaheim. Olson will add a 210-room Courtyard by Marriott in the Irvine Spectrum about the same time. Those will be followed by a 178-room Hyatt Place Anaheim Resort toward year’s end.

US Hotel Construction Spending Soars

By Shawn A. Turner

REPORT FROM THE U.S. - U.S. hotel construction spending has been on a tear lately.

Spending in the hotel industry through July was up nearly 39% to $15.2 billion, Kermit Baker, chief economist with the American Instituter of Architects, said, quoting U.S. Census Bureau data. The increase far outpaced the other commercial/industrial sectors of commercial (+1.6%), manufacturing (+0.2%) and office (-2.1%), he said during a Reed Construction Data webinar titled “The 2014 outlook: Emerging opportunities for construction.”

Baker said architecture firms are also beginning to slowly build up their project backlog levels, a sign that more work is coming in. The AIA’s Architecture Billings Index for September registered a 54.3. Any score higher than 50 indicates billings growth.

“Design activity is clearly pointing to an uptick in construction activity,” Baker said.

Bill Wilhelm, executive VP at R.D. Olson Construction, said he is seeing more interest in ground-up development.

Bicycle Casino Hotel

There were a total of 2,767 projects comprising 333,775 rooms in the in construction, final planning or planning stages as of September, according to data from STR, parent company of Hotel News Now. The number of projects scheduled to open in 2014 is expected to increase to 877 hotels and 98,651 rooms, up from 188 projects totaling 19,586 rooms during 2013.

R.D. Olson is commencing construction on the $45-million, 100-room Bicycle Casino Hotel in Bell Gardens, California. Construction on the nearly 118,000-square-foot hotel is expected to be completed during the first quarter of 2015.

“We’re seeing more ground-up opportunities over the next six to eight months,” he said. “People want to get off the shelves and get into the dance.”

Marty Collins, president and CEO of real estate investment and development company Gatehouse Capital Corporation, said he has noted a pickup in the amount of the sector’s activity.

Much of the hotel construction focus has shifted to select-service hotels, which is what largely comprises Gatehouse’s pipeline, Collins said. The company is looking at markets including Houston, Dallas and Fort Worth, Texas.

“Clearly, you’ve seen supply increasing. The difference today is there is a little bit more of an urban focus,” he said.

Samuel E. Cicero, Jr., president of Cicero’s Development Corporation, said his construction company hasn’t worked on any new builds—yet.

“We have been asked to look” at some projects, he said.

Debt availability
Experts said during the Reed Construction webinar that lenders are loosening the reins on their underwriting standards relating to construction financing but not doing so in large swaths.

According to the “Federal Reserve Board senior loan officer opinion survey in July,” 76% of respondents said their credit standards were unchanged, with 18% saying standards had eased and the remaining 6% reporting tighter standards. By comparison, 50% of respondents reported stronger demands for loans; 42% said they were seeing the same level of loan demand; and 8% said there was weaker demand.

The lack of movement in underwriting is a surprise given how tight lenders were with credit during the downturn, Baker said. “Modest easing is still a little disappointing.”

Renovation financing is a little easier to come by than new construction, which is proving to be more dicey, Cicero said.

Most of the debt that is available comes by way of regional banks, Collins said. Increasing performance within the sector is helping to smooth some of the fears lenders might have when approached about a potential project, sources said.

Regardless, “terms are challenging,” Wilhelm said of the debt developers are able to find.

Points of emphasis
While there are some new builds going up, a lot of the activity today is related to renovation projects, sources said. Owners are still trying to get caught up on their property improvement plans, which is driving a lot of the action.

Cicero said brands are no longer as forgiving about pushing PIPs off as they were during the downturn. “Now they’re seeing the need to get back on it.”

Much of the work is focused on infrastructure improvements, Cicero said, including heating, ventilation and air conditioning; lighting systems; power; and mechanicals.

Wilhelm said guest-facing areas are also seeing work, such as lobbies, restaurants and meeting rooms, for instance.

As for costs, Wilhelm and Cicero said they have seen slight increases in raw material prices, but nothing dramatic. Cicero said the increases amount to about the cost of inflation—2% to 3% cost increases a year.

“Nothing that’s too far out of line,” Cicero said.

A bigger concern is finding skilled labor and planning for the project, he said. “It takes six months to a year from the time you start planning to the time you start working in the building.”

Looking ahead, Wilhelm said he expects the recent spate of hotel construction spending activity to continue, especially as the overall industry recovers.

“We see a good environment for the next three years,” he said.

R.D. Olson Construction completes work on Legoland Hotel in California

US-based R.D. Olson Construction, Incorporated has completed construction work on the 250-room Legoland Hotel at Legoland California Resort in Carlsbad, California.

The new Legoland Hotel is located at the entrance to Legoland California Resort, requiring construction to occur without impacting the guest experience.

The fabricated custom scaled replica Lego bricks adorn the hotel's exterior façade, while more than 3,500 Lego models are spread throughout the property, including a smoke breathing dragon ensconced in the clock tower at the hotel's entry. The hotel also includes multiple interactive play areas such as the 32-foot high pirate shipwreck, river of LEGO and knight's castle in the hotel's atrium.

The three-story hotel provides different Lego theme on each floor, including Pirate, Adventure and Kingdom. The public spaces include Bricks Family Restaurant, Skyline Cafe, Mini's Lounge, event space and an outdoor heated swimming pool.

The guest rooms of the hotel include a kid's alcove with bunk beds and a trundle bed, plus a separate sleeping room for adults. Every aspect of the hotel replicates Lego custom millwork, wall coverings, lighting, artwork, Lego standard paint colors, carpet, and even themed elevators.

R.D. Olson Construction has worked with Storyland Studios and with a local architect to deliver the project for Merlin Entertainments Group, a UK-based operator of amusement parks. The construction work on the project has lasted for 15 months.

Top Icons of the Hotel Industry

by John Jordan | National


Their paths to success may have been different. Some took the reigns as head of families who worked in the hospitality business for generations. Others worked their way up the corporate ladder, one even starting out as a bellhop and another as a dishwasher, gaining experience and honing their skills over decades on their respective journeys to the executive suite.

One thing is for sure: all are titans of the hotel sector and their decisions have created jobs and wealth here in the United States and in major markets worldwide. The following are Real Estate Forum’s Top Icons in the hotel sector:

Archie Bennett Jr.
Jon Bortz
Sam Chang
Eric Danziger
Jack DeBoer
Benjamin “Patrick” Denihan Jr.
Jeffrey Fisher
Jonathan Gray
Robert L. Johnson
Stephen P. Joyce
Richard M. Kelleher
Richard C. Kessler
Richard Marriott
Joseph A. McInerney
Christopher J. Nassetta
Marilyn Carlson Nelson
Robert D. Olson
Leland C. Pillsbury
Thomas Pritzker
Hasmukh P. “H.P.” Rama
Ian Schrager
Horst Schulze
Hasu P. Shah
Isadore Sharp
Arne Sorenson
Barry S. Sternlicht
Jonathan Tisch
Bruce White
C. Kemmons “Kem” Wilson, Jr.
Len Wolman

To read the profiles of these lodging legends, go to the January 2013 issue of Real Estate Forum online.