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June 28, 2002
Houstonian to restore historic Isle hotel
Nancy Sarnoff, Houston Business Journal
One of the last remaining undeveloped buildings along The Strand in Galveston has been sold to a Houston developer for a historic restoration project. This week, Andrew Kaldis of Kaldis Development Interests acquired the former Panama Hotel located at the southeast corner of The Strand and 25th Street. Kaldis is evaluating plans to convert the 1912 structure into either a 50-room luxury hotel, a for-sale condominium development or a student housing facility. Kaldis purchased the property from the Galveston Historic Foundation. The sales price was not disclosed. Although Kaldis has already begun working with architect Ed Eubanks on the condominium and student housing scenarios, the upscale hotel concept would likely be the most high-profile use. The property is in walking distance of Galveston's cruise ship terminal, which Kaldis sees as a boon to the local hospitality industry.
Currently, three cruise ships -- operated by Carnival and Royal Caribbean -- sail from Pier 25. And another ship is expected to join the line-up in the near future, says Christa Buggey, director of Galveston's Convention & Visitors Bureau. "We're looking at probably 300,000 guests next year just coming down to the cruise terminal," she says. Buggey says she has been approached by numerous hotel developers from Texas to California interested in Galveston's burgeoning hospitality market. Still, Buggey concedes that the local hospitality industry has been down slightly since Sept. 11. Tax collections are down about 5 percent -- or about $100,000 -- this year, she says. However, with a new 130,000-square-foot convention center being built on the island by Houston restaurateur Tilman Fertitta, Buggey remains optimistic. "We're seeing more interest in Galveston since we announced construction of the new convention center," she says. "Economic development like that is going to spur new development."
Meanwhile, Kaldis is in talks to partner on the hotel project with Phoenix Hospitality Group, a San Antonio-based hotel operator that has carved out a niche in small luxury hotels. Phoenix operates the exclusive Havana Riverwalk Inn in San Antonio and Ye Kendall Inn in Boerne in the Texas Hill Country.
Chugging along
The historic Panama Hotel was built to serve rail passengers. It is located next to the old Santa Fe Train Station, which is now Galveston's Railroad Museum. At the time the Panama was constructed, it boasted 103 guest rooms, many with private baths, heated and cooled water, steam heat and telephones. The hotel was given its name because it opened around same time the Panama Canal came into existence. The four-story building, which has been vacant for decades, comprises roughly 28,000 square feet. Its style can best be described as a blend between art deco and arts & crafts. Aside from the revived hotel concept, another development option for the property is converting the top three floors to 15 loft condominiums. Kaldis says the historic units would have more of a cutting-edge design than other Galveston condominiums. "I think Galveston is ready for an interesting condo concept," he says. Kaldis' third plan for the building is a student housing facility. He says a strong demand for contemporary student housing exists from students attending The University of Texas Medical Branch in Galveston. Under this plan, the old hotel would essentially be converted into a private dormitory, with small apartments leased to students. Kaldis says he will decide on one of the three redevelopment scenarios by the end of the year.
© 2002 American City Business Journals Inc.
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03/17/03
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