A building in downtown Charlottesville that has sat, unfinished, over the past 16 years is for sale, a move that could finally help turn the run-down property into the luxury hotel it was meant to be — or potentially into housing.
The incomplete hotel property at 201 E. Water St. on Charlottesville’s Downtown Mall has faced an array of issues since breaking ground in 2008. The Daily Progress reports those include when construction stopped in 2009 after the project went into bankruptcy and a 2017 deal to give the current owner tax breaks was rejected by the City Council (also per The Daily Progress).
Residents and city officials have described the structure, bought at a public auction by real estate developer John Dewberry in 2012, as an eyesore in need of a change. Apart from a 2022 mural installation, the building remains unused.
The property’s potential sale to new developers has revived talks about bringing a high-end hotel to Charlottesville, a plan that some believe will help address the local economy’s growth in tourism demand.
While the idea of something being built at the site was received with praise, City Councilor Michael Payne said Charlottesville’s Downtown Mall needs more housing options, not another boutique hotel.
“I think the best outcome is if you could have housing built on that site,” Payne told VPM News. “And I hope that the city would be able to communicate that if someone was interested in pursuing an apartment housing project there, that we're willing to work with them in terms of having flexibility on incentives or adjusting the zoning in order to make housing development more feasible.”
Joan Fenton owns a business on the Downtown Mall, and is a member of nonprofit Friends of Charlottesville Downtown. She would like to see the property become a hotel, because she wants to see the downtown region thrive. “We’re a huge tourist destination, and they would have a best interest in us continuing to be attractive to tourists if it’s a hotel,” she said. Fenton added that if the building is a hotel, she believes that would lower the cost of finishing the building, as opposed to tearing it down and starting from scratch.
According to The Daily Progress, the two brokers chosen to sell the structure by Dewberry believe the property is best suited for hospitality use because current design elements in place bar it from residential use.
One of them — Carter Gradwell, senior director of hospitality at Walker & Dunlop Capital Markets — told the newspaper that interest is high among premier developers in the industry, like Hilton and Marriott.
The brokers did not share the property’s asking price with The Daily Progress. Since Dewberry’s Deerfield Square Associates II LLC bought the property for $6.25 million in 2012, city records show its assessed value has grown to nearly $9 million.
For Payne, the city’s most beneficial path is to build housing at the Dewberry site instead of a hotel to help fix the city’s housing crisis.
This would, he said, benefit people who are in the city “every single day of the year” instead of tourists, leading to consistent foot traffic at events, local restaurants and businesses.
Matthew Gillikin, co-chair of the advocacy group Livable Cville, called the structure “a terrible eyesore and a major lost opportunity.” He told VPM News either a hotel or apartments “would be a significant upgrade over the current empty shell and make the Downtown Mall a more vibrant place.”
Both options, he said, would give the city tax revenue to fund priorities such as education, transportation infrastructure and homelessness interventions.
Gillikin told VPM News that the more people in downtown Charlottesville, either staying in a hotel or living in an apartment building, “the better it will be for business downtown.”
Developers pursuing a housing development on the site would be required to make 10% of the homes affordable to residents making less than 60% of the area’s median income, Gillikin said.
“It would be consistent with the city’s own Inclusionary Zoning studies and stated housing goals to provide some financial assistance towards the affordable homes,” he said.
The city would need to be flexible on zoning and tax incentives if buyers are looking to build apartments, Payne told VPM News — but he said private developers looking to build a hotel shouldn’t get tax incentives to do so.
Payne said the hotel route “may be the path of least resistance for anyone who buys it,” but he feels it’s not in the best interest of the city’s needs.
“I think the fact that it’s going up for sale will be a positive thing because I think it greatly increases the chances that something will actually get built there, which will obviously be better than a vacant building in the middle of one of Charlottesville’s main community centers,” he said.
Purchase bids for the property must be submitted by Jan. 9.
Meghin Moore contributed reporting.
