"Because of the rising prices of these vacant buildings, it's getting harder to make residential projects work."
The Hamiltons know all about the downtown apartment market. Starting with the Davis Building in 2002, Dallas-based Hamilton Properties has built almost 800 rental units in the central business district.
Their latest apartment project combines two former Union Fidelity Life Insurance Buildings at Akard Street and Pacific Avenue into downtown's largest high-rise apartment complex. It has 440 units, and rents start at more than $1,200 a month.
"We have about 75 units rented, which we think is good since you haven't been able to get in the front door until just recently," said Mr. Hamilton, who expects to finish construction this summer.
Soon after, work will begin on the developers' first hotel redo.
The Santa Fe IV at 1033 Young St. was built in 1925 as a railroad freight warehouse. The eight-story brick building across from the Dallas Convention Center has been vacant for more than a decade.
Hamilton Properties, in partnership with Irving hotel firm Sava Group, plans to convert the derelict industrial building into an Aloft hotel. Aloft is a new chain being rolled out by W Hotel's parent company, Starwood Hotels & Resorts Worldwide Inc.
"We always wanted to do a loft hotel, and this was our perfect opportunity -- a warehouse building," Mr. Hamilton said. "We plan on start construction in September."
The developers will add a ninth floor to the building, which will give them space for 195 rooms. They also plan to open up the big arched windows on the lower floor of the building and add a curved auto court on one side.
Hamilton Properties first looked at using the Santa Fe IV building for a combination of residential units and hotel rooms, but they decided the demand was stronger for lodging.
"There isn't any other national hotel brand that is as close to the convention center," Mr. Hamilton said.
Good bones; bad spot?
The company's second hotel deal is just as close. It's redoing the 252-room Plaza Hotel at Akard and Interstate 30, across the freeway from the convention center.
The 12-story hotel was built in 1972 and at one time operated as a Ramada Inn.
The renovation plan is for a much different property than a standard roadside brand.
"We are targeting more of the hip, urban, chic," said Larry Hamilton. "We've looked at all the Ian Schrager hotels, and we want to be very edgy."
Mr. Schrager has opened boutique hotels in New York, Miami, Los Angeles and San Francisco.
"Our Plaza Hotel has good bones and a fabulous view of the skyline," Larry Hamilton said. Plans call for a dramatic new entry, a theme restaurant and bar and a redesigned pool area.
A top floor of themed hotel suites will replace current bar and restaurant space.
Construction is scheduled to start this fall, Mr. Hamilton said.
The architect for both hotel projects is One Group Design.
While downtown Dallas isn't lacking for hotel rooms, new small and unique properties can capture business, said Greg Crown of hotel analyst PKF Consulting.
"The Aloft hotels are a little bit more trendy because of Starwood's panache," Mr. Crown said. "It's targeted to be directly competitive with Hilton's Garden Inn and Marriott's Courtyard."
He said the Santa Fe IV location is an ideal site to attract convention business. But, Mr. Crown said, the Plaza Hotel has previously been a tough location because it's across the freeway from downtown.
That could be somewhat offset by redevelopment in the area just south of Interstate 30, which includes condominium, apartment and entertainment projects.
Not entirely new
Hamilton Properties does have some experience in hotels.
Mr. Hamilton said that while his company is known in Dallas for its apartment deals, it was involved in hotel projects in Denver. And Hamilton Properties is also one of the partners in the Magnolia Hotel in downtown Dallas.
"I've helped [hotel developer] Steve Holtze on the Magnolia and on a project in Houston," Larry Hamilton said. PLAZA HOTEL, AS IT COULD BE: Plans call for an urban chic feel for the 252-room hotel, a new entry, a theme restaurant and bar and a redesigned pool area. Hamilton Properties plans to convert the industrial building into an Aloft hotel with an additional floor and an auto court. SANTA FE IV, NOW: The brick building near the convention center was built in 1925 as a railroad freight warehouse. It has been vacant for several years.