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MAD Development Diaries: The End of the Beginning

This important milestone was a long time in the making. It’s been nearly four years (spring 2020) since Mount Airy Downtown, Inc. began creating the Request For Proposals process that led to Sunhouse Development submitting a proposal to turn the historic 1892 “Sparger” building on the Spencer’s Mill redevelopment site into a boutique hotel. And this occurred in the first year of COVID, when financial and hospitality markets were badly stressed.

From the beginning the Sunhouse team stated their desire to develop and operate this hotel under the Marriott International flag. It took about 18 months to navigate that intensive process, which resulted in Marriott approval of Sunhouse as the owner / operator and Mount Airy as a suitable location for a Tribute Portfolio hotel. As evidenced by the brief reveal of the Balladeer Hotel last Thursday, the Marriott-approved branding and design teams bring great expertise to meet exacting standards. Pursuing Marriott slowed the development process but enhanced the quality and increased the likelihood of successful operations. In short, it has been worth the wait to get to this point.

Speaking of which, as City Attorney Hugh Campbell (channeling Winston Churchill) characterized this “first closing” milestone: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” This step enables the Developer’s general contractor (The Christman Company) to undertake the required demolition, repair and stabilization work leading up to the start of general construction later this summer. The team is planning to achieve substantial completion by the end of 2025 in order to allow time for hotel up-fit and opening in the second quarter of 2026.

MAD will be following, and occasionally reporting on, the site developments going forward. In addition to the Developer’s hotel construction work, these will include grading the site and installing public infrastructure by the City’s civil engineering team.

Concurrently the next phase of the overall Spencer’s Redevelopment Initiative – the Convention Center Project – will be getting underway just to the west of the hotel campus. Recall that the City was awarded a total of $15 million by the State during the past two legislation sessions to prepare the site and construct the facility. That site work will continue this spring and summer as the preliminary design and engineering for the convention center progresses. In short, there will be lots of construction activity on and around the remainder of the Spencer’s Mill site during the next couple of years.

The Spencer’s Mill Redevelopment Initiative began in 2014 with the City’s acquisition of the nearly 10-acre site (shuttered in 2007) and has proceeded in three distinct phases:

  1. PHASE 1 – Downtown Residential (2014-2020, completed). This included the Spencer’s Loft Condominiums (16 units) and the Spencer’s Mill Apartments (65 units) along with brownfield costs / site work and public infrastructure. The Phase 1 total investment was $18.5 million, of which $15.3 million (83%) was private.

  2. PHASE 2 – Hotel Properties (2021-2026, underway). This includes the hotel in the Sparger Building along with a restaurant and event space in the Barrell Building plus additional site work and public infrastructure. The Phase 2 total investment current estimate is about $25 million, of which about $22 million (88%) is private.

  3. PHASE 3 – Convention Center (2022-2026, underway). This includes the convention center, a new visitor center, and outdoor amenities for both residents and visitors along with additional site work and public infrastructure. The Phase 3 total investment current estimate is about $18 million, of which $15 million (83%) is funded by the State.

Overall, the Spencer’s Redevelopment Projects represent total investment of more than $60 million (most of it private). The combination of downtown residences, a Marriott Tribute hotel, and a convention / visitor center with outdoor amenities will be transformative. The incremental tax valuation of these properties (excluding the convention / visitor center) will be greater than $24 million, and the incremental sales generated by these properties are estimated to be over $25 million per year. This is all about community development and growth, turning a large unsightly and unused parcel in the middle of town into a thriving hub of economic and social activity. More to come…

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