[wags_in_the_peg]

Airport hotel plan taking off?
Lakeview says $28-million deal could be sealed by month's end
Wed Dec 19 2007
By Murray McNeill

LAKEVIEW Management Inc. is close to striking a deal to construct a new 100-room luxury hotel at Winnipeg's James Armstrong Richardson International Airport and is also negotiating to build a six-storey office building next door.

Lakeview Chief Executive Officer Jack Levit said he is in talks with Winnipeg Airports Authority officials on both proposals, and hopes to seal an agreement by the end of this month.

However, a WAA spokesperson refused to confirm Tuesday that a deal is close.

"We're open for business," Christine Alongi said. "But we're in negotiations with lots of people about lots of things. Until we're in a position to announce something... we don't tend to chat about it."

Levit said Lakeview is planning a $20-million, seven-storey hotel directly across from the new terminal building under construction and slated to open in early 2010. It is also proposing a new $8-million, 50,000-square-foot office building to bridge the gap between the new hotel and Lakeview's existing airport hotel, The Four Points Sheraton Winnipeg.

He said the office building would have banquet and meeting rooms on the main floor and offices on the five upper floors.

If Lakeview's proposal is accepted, all three buildings would be connected at the ground-floor level.

The new airport hotel and office building are among three new projects Lakeview aims to get underway in 2008. The other is a previously announced 11-storey, 110-room all-suites hotel on St. Mary Avenue just west of the Winnipeg Convention Centre.

Levit said Lakeview hopes to start building the two hotels this April or May. Work on the office building -- if approved -- likely wouldn't start until next fall, but the plan would be to complete all three projects around the same time -- late 2009 or early 2010.

The $18-million downtown hotel would be connected via second-floor walkways to both the Convention Centre and the office building at 400 St. Mary.

Levit said a second hotel is needed at the airport because The Four Points Sheraton is usually full four days of the week and is turning customers away.

"The demand right now is for about 200 rooms," he said, and the Four Points Sheraton has 132.

Levit said Lakeview originally planned to do a $10-million expansion and upgrade of the existing hotel, which is about 122 metres away from the site of the new terminal building. But when the land across from the new terminal became available, it decided to try building a second hotel instead.

"We feel we should be right across from the terminal and people can make their choice of either hotel."

The new hotel would be a luxury hotel to differentiate it from the Four Points Sheraton. Levit said while it wouldn't qualify as a five-star hotel -- it would need to have at least 200 rooms to do that -- it would have all the trappings of a five-star facility.

The president of the Manitoba Hotel Association said having a second hotel at the airport makes sense for Winnipeg because there is a growing demand for hotel rooms near the airport. Winnipeg's overall hotel-occupancy rate has been edging upward over the last seven years despite the addition of about 1,000 new rooms.

"I wouldn't want to characterize it as a boom," Jim Baker said. "It's more a slow and steady growth. It's the Manitoba way."

While Levit is convinced there's also a need for an airport office building, one local commercial real estate agent isn't so sure.

Wayne Johnson, of Royal LePage Dynamic Real Estate Services, said the vacancy rate at another office building near the airport -- the Airport Executive Centre at 1780 Wellington Ave. -- has been climbing over the past year and now sits at just under 33 per cent.

Although that building was built in the late 1980s, "it is a good comparison," Johnson said.

"Two years is lots of lead time (to find tenants)," he said. "But I think there will be difficulties finding enough tenants."

The big three
Here are some details of the three new commercial projects Winnipeg-based
Lakeview Management Inc. hopes to launch in 2008:

New airport hotel
Proposed location: Directly across from the new airport terminal building now under construction
Size: Seven storeys, about 100 rooms
Type of hotel: Luxury
Projected cost: $20 million
Projected start of construction: April or May, 2008
Projected completion: Late 2009 or early 2010

New airport office building
Proposed location: Adjacent to new airport hotel
Size: Six storeys and about 50,000 square feet
Projected cost: About $8 million
Projected start of construction: Fall 2008
Projected completion: Late 2009 or early 2010

New downtown hotel
Location: South side of St. Mary Avenue, immediately west of Winnipeg Convention Centre
Size: 11-storeys, 110 rooms
Projected cost: $18 million
Projected start of construction: April or May, 2008
Projected completion: Late 2009 or early 2010
-- Source: Lakeview Management Inc.