The City of Carmel and Pedcor Companies is releasing an update on hotel construction costs and finances, as well as announcing details of a new French restaurant concept planned for the boutique hotel that is under construction at City Center. The Hotel Carmichael is still on scheduled to open in May of this year, in time to welcome the International Making Cities Livable conference, which will make its first appearance ever in Indiana.
The City of Carmel says due to a variety of economic factors, including the national increase in construction costs and local spikes in labor costs and tariffs on materials and goods imported from abroad, the overall cost of the hotel has increased from the time of the original estimate provided in 2017. The new estimate on construction is $58.5 million, which includes a new “hard construction” budget of $41.9 million, $3 million for the land and $13.5 million for soft costs.
“The same factors that have led to a building boom across the nation, the state and the city of Carmel itself have unfortunately also led to increases in costs of materials and labor that have impacted the hotel,” said Henry Mestetsky, Executive Director of the Carmel Redevelopment Commission. “As we tracked these construction cost increases reported by various construction-related sources, we anticipated the challenge. Fortunately, the Redevelopment Commission has filled those gaps with additional funding that will have no risk or impact on local taxpayers and be largely reimbursed to the Commission out of the revenues of the Hotel.”
A variety of additional financing through existing bond revenue and new mortgages on the James Building and Monon Square secured by the CRC, will allow Pedcor and the City to cover the additional costs with no risk or impact to local residents. This includes a CRC commitment to have more than $12 million reimbursed out of anticipated hotel revenues.
“This magnificent new hotel will play a key role in our economic development strategy as we meet the needs of our corporate community with a boutique hotel for their clients and visitors, as well as tourists who will come to stay near the Palladium and the heart of our new downtown, providing a substantial economic benefit to our local businesses,” said Mayor Jim Brainard. “Henry and the CRC have done a good job of managing this project in the face of many challenges outside our control. It is important to know that none of the additional costs will be borne by local residents, who will instead benefit from additional private corporate investment and a greater quality of life in Carmel.”
Across the nation, similar projects have been feeling a similar pinch, according to experts in the industry.
“National construction cost data has recorded significant increases in nearly every construction market. The average cost of a luxury hotel alone has increased by 37 percent since 2017,” said Kevin Hunt, President and Chief Operating Officer for Shiel Sexton. “Locally, the greater Indianapolis construction market has experienced cost increases in materials and labor. On average, 9 percent of a building utilizes steel products. Since 2017, raw steel prices have fluctuated significantly but have increased over 25 percent.”
Hunt continued, “In the last 24 months, drywall products have seen an increase of 12 to 13 percent per board foot. A variety of factors has caused these increases including recent trade tariffs, raw material shortages and material price escalation. The labor market in Central Indiana is very tight, labor costs including compensation and benefits have increase 16.1 percent since September 2018. The result of these and other factors have forced subcontractors to be very selective in the projects they bid, leading to additional increases in overall construction costs.”
The strength of the national and local economies, the increasing costs of hotel developments similar to The Carmichael and anticipated increasing demand for luxury hotel rooms should all result in a significant increase in revenues for the Hotel Carmichael compared to the original projections, which should provide a significant return on the additional investment that has been made.
According to the City of Carmel, the Hotel Carmichael – like the Palladium and the Center for the Performing Arts, Carmel City Center, Midtown Plaza and the Arts & Design District – remains a good investment in the community that will no doubt attract a return on investment and continue to keep Carmel one of the best cities in America to live, work and raise a family.
Vivante – A French Eatery
The Carmichael has also announced details on the new French restaurant to be open to the public and hotel guests, serving breakfast, lunch and dinner with a full-service bar. Vivante (which translates to “alive” in French) will be a French countryside-inspired culinary experience that is welcoming, warm and approachable with a French-inspired cuisine in an elegant, but not pretentious dining environment and a menu that is relevant, fresh, vibrant, creative and hearty and will create a lasting culinary experience.
Coury Hospitality is currently working on the final process of hiring a Food & Beverage Manager and Executive Chef, with plans to post additional management and hourly positions by March 1.
“I am excited to offer the local Carmel community, as well as travelers from all over the world, a unique culinary experience, combining cuisine, culture and outstanding service,” said General Manager Jamie Hopwood.