Less than two months after Californian real estate investor Chih "John" Yuan Yu bought his first Orlando hotel property off of N. International Drive, the owner-operator spent another $2.6 million in late December to buy a retail parcel across the street, and plans to eventually redevelop the property into a new hotel, his local real estate broker told GrowthSpotter.
Located at 5855 American Way, a cul de sac near the intersection of North I-Drive and S. Kirkman Road, Yu bought the two-acre parcel from Alltour Americaon Dec. 18 (filed Jan. 4). The travel agency had owned the land since February 2010 (then a $1.6 million purchase), and operates out of a single-story office there.
Yu had previously bought the Super 8 motel at 5900 American Way on Nov. 4 for $7.5 million, and is now managing that property.
"We know this happened quickly after Super 8, but (Yu) realized there has been a lot of growth happening in the area, this parcel became available and I encouraged him to pounce on it," said Kiran Patel, commercial real estate broker who represented the buyer.
"He'll do some form of a hotel there in the future, but we have yet to analyze what the options may be," Patel continued. "Nothing is mapped out yet. We know its zoning could allow a hotel of up to 200 feet in height. We won't file anything with (the City of Orlando) too soon, he still needs to pick out a franchise, likely a recognizable brand."
Alltour America will remain on the property for up to six months before relocating, Patel said.
Growth in the cul de sac doesn't concern Yu, as Home2 Suites and the existing properties there are varied enough in their star level and product type to not cannibalize one another's target demographic.
While city zoning could allow a building of up to 20 stories on the property, with just two acres to work with it will likely be more along the lines of a mid-level, select-service branded hotel, with six to eight stories and around 150 rooms, Patel said.
Yu closed the sale with Alltour America within 25 days, Patel said. That followed a 26-day closing for the Super 8 property. The buyer paid cash for the latest purchase, and neither were prompted by a 1031 exchange opportunity, Patel noted.