Plans are moving forward between the city of Charleston and a Morgantown-based hospitality firm to construct a new hotel near Appalachian Power Park.
During its meeting Monday night, Charleston City Council voted unanimously to enter into a ground lease with Centurion Development Group, which plans to construct a roughly $20 million, upscale hotel on a city-owned parking lot at the corner of Morris and Smith streets.
The site in question sits next to the CharmCo building.
Centurion still can back out of the lease, pending the results of a feasibility study that's expected to be completed in the next few months, said Martin Perry of Newmark Grubb Knight Frank, who's partnering with Centurion on the deal.
"The hospitality business is all based on that study," Perry said.
He said the study, completed by a third-party consultant, provides an overall market analysis that will gauge whether the market can absorb additional hotel rooms in a specific geographic area, and what type of services should be offered.
Currently, the firm plans to build a roughly 80-room limited-service hotel, meaning it wouldn't have a restaurant or banquet facilities.
The firm also is considering extended-stay rooms, Perry said, to accommodate those who are visiting for multiple nights.
The target market for the site, which is nestled in the East End's warehouse district, are people visiting Charleston Area Medical Center, the state Capitol, the ballpark and Clay Center.
Perry said there currently is an underserved market in that area.
While the Charleston Capitol Hotel and Motel 6 are just a few blocks away on Washington Street East, Perry said those aren't seen as competitors.
"New always trumps old. We're looking for more of an upscale, extended-stay [option]," he said. "Those, I'd categorize as budget [hotels]."
The lease agreement won't go into effect until Centurion has the results of the feasibility study.
"They don't have to pull the trigger until they do their due diligence and make sure they can proceed with a hotel on that site," City Manager David Molgaard said.
The firm has 150 days to complete the study.
Under the lease terms, Centurion would pay the city a monthly rent of $7,350 for the first five years. That would increase every five years thereafter by the average percentage increase in the Consumer Price Index.
While the Gazette-Mail reported last May that Centurion also would be responsible for landscaping another city-owned parking lot on Smith Street to make up for the loss in parking spaces, Molgaard said the city will instead do that work in house.
"We determined we could do it in house cheaper than the value they wanted to be attributed to the deal," Molgaard said.
Nothing will be done on the alternate parking lot until Centurion officially locks into the lease, Molgaaard said.
Reach Elaina Sauber at elaina.sauber@wvgazettemail.com, 304-348-3051 or follow @ElainaSauber on Twitter.