Second Philadelphia Navy Yard hotel planned in aged barracks

During the Philadelphia Navy Yard's military days, the historic barracks east of what's now a gleaming modern business park at the sprawling former base's core were home to U.S. Marines who guarded the facility.

Soon the barracks' spartan chambers may become fancy guest rooms.

Ensemble Investments LLC, the Phoenix-based owner of the Navy Yard's existing Courtyard by Marriott hotel, is in discussions to buy the trio of red brick Colonial Revival-style structures from the city for about $1.5 million, with plans to resurrect the U-shaped complex into a 230-room four-star hotel.

The plan, expected to cost $100.9 million, comes amid business growth at the Navy Yard that's stoking demand for hotel stays and would be the latest move toward expanding the former South Philadelphia military base beyond its existing identity as a corporate, industrial, and research park.

"This caters to a different group of people who are not attracted right now to the Navy Yard. They want higher-end rooms, they want a full-service hotel, they want higher-end finishes, they want to have corporate meetings there," Ensemble chairman Kam Babaoff said in an interview. "With the growing Navy Yard, the business is going to be there to support another hotel."

Plans call for renovating the buildings' existing 120,000 square feet of interior space and adding a 75,000-square-foot expansion. The buildings also will accommodate an 8,000-square-foot restaurant and bar that opens up to the Navy Yard's landscaped Central Green park, as well as about 10,000 square feet of meeting rooms and other amenities.

The barracks complex, constructed between 1919 and 1942 to house the former base's security detail, stands on the southern edge of the Central Green just outside the Navy Yard Corporate Center, a cluster of new buildings developed mostly by Liberty Property Trust of Malvern.

The buildings were later used for administrative offices and other functions, including a day-care center, until the Navy Yard came under Philadelphia-government ownership in 2000 after the U.S. Department of Defense decommissioned the site as a military base, according to a walking tour published by the Philadelphia Industrial Development Corp., which manages the 1,200-acre property for the city.

Ensemble also had proposed a 22-story apartment tower on the Delaware River near Center City. Its plan for the Navy Yard barracks is likely the most ambitious proposal to reuse existing buildings at the former base since the development of Urban Outfitters' headquarters campus in a complex of 19th- and early 20th-century warehouses on another part of the former base.

Much of the yard's office development has been in newly built structures at Liberty's Navy Yard Corporate Center, where companies including GlaxoSmithKline and FS Investments (formerly Franklin Square Capital Partners) have headquarters.

John Gattuso, regional director for Liberty Property Trust, said the barracks hotel would complement the existing development.

"This use continues to create activity around an expanded number of hours of the day," said Gattuso, whose company is not involved with the hotel plan. "That's a positive thing for the continued growth of the Navy Yard."

Ensemble had previously intended to build a new hotel from the ground up on land it acquired inside the Corporate Center beside the 1200 Intrepid Ave. office building, known for its curved facade designed by Copenhagen-based Bjarke Ingels Group.

Babaoff said Ensemble still has plans to develop that parcel, possibly as an extended-stay hotel, but it couldn't pass up the opportunity to revive the former barracks, given the size, architectural appeal, and location beside the Central Green.

"We love the exterior, the brick building," he said. "Trying to bring that back will be fantastic."

Andrew Benioff, a hotel specialist at Llenrock Group commercial real estate consultancy in Philadelphia, said it would be positive for visitors to the Navy Yard to have a higher-end, more boutique alternative to Ensemble's Marriott, which is known to be drawing a steady stream of guests.

Data from Hendersonville, Tenn.-based data and analytics firm STR backs that up: Ensemble's Marriott is among the seven hotels that STR tracks in its tally of Navy Yard, airport, and stadium-area "upscale class" hotels, which saw average occupancy rates of 76.2 percent in 2017. The average occupancy rates for all hotels in the Philadelphia metro area, by contrast, was 68.5 percent.

“It definitely seems like there’s demand in that area, and excess demand,” Benioff said.