The Menlo Gateway project is stalled until outside financing sources are available to build a hotel, said Developer David Bohannon.
Bohannon fielded questions Monday night from Menlo Park's Planning Commission during an annual review of the that he signed with the city.
Despite the difficulties that the developer has encountered due to a stagnant economy, commissioners unanimously agreed that Bohannon is making a "good faith effort" in attempting to build the project.
Bohannon said that outside of the New York City and Washington DC areas, financiers are not investing money in building hotels, which is adversely affecting progress of his project.
"There really simply isn't financing for any hotel products," said Bohannon.
Funding would not likely available for another few years, he said, until the economy rebounds to the heights it reached around 2007.
"My general understanding is that, until there is a broader job recovery in our domestic economy, investing in hotels will not open up," Bohannon said.
He denied that construction difficulties were caused by a reluctance on the part of the developer to build the project.
"I don't want to leave you with the impression we are not trying to bring investors to the hotel," said Bohannon.
building a 941,000-square-foot hotel and office project last year, and Bohannon is required to return for annual updates with elected commissions over the course of the construction.
Commission Chair Vincent Bressler said that he believes progress will be made toward breaking ground on building the hotel given Bohannon's interest.
Bohannon said Marriot has expressed interest in owning and operating a hotel in the development, as have other retailers. The project, will be built at 100 to 190 Independence Drive and 101 to 155 Constitution Drive.
That shopping area grows increasingly desirable as a hotel location due to its proximity to the new Facebook headquarters, Bressler said.
According to the development agreement between the City of Menlo Park and Bohannon, most of the hotel space in the development must be built before office space can be offered for rent. Bohannon said he believes potential benefits to building the office space and renting it before the hotel is constructed exist. But the agreement precludes such an action from taking place, at the behest of the city of Menlo Park.
"I think the city wants to be absolutely certain they will get the hotel. That is why it is structured the way it is," said Bohannon.
Bohannon said he has had several meetings with real estate workers at who have expressed interest in the hotel being built, but have not offered to finance the project.
Commissioner Henry Riggs said that the current economic environment would offer a golden opportunity for wise investors to contribute financing to the project's construction. He acknowledged it would be unlikely for a business to take such a risk amidst a still stagnant economy.
"An intelligent investor would get on board now," said Riggs. "But the world doesn't work like that."