A developer will begin building two midpriced hotels across from the Boston Convention & Exhibition Center by the end of the year, a crucial step in the $2 billion expansion planned for the South Boston complex.
The Massachusetts Convention Center Authority on Thursday selected CV Properties of Boston to build the hotels, slated for a rectangular lot on D Street the authority purchased last year.
The $137 million project includes a 330-room Aloft hotel and a 180-room Element hotel, both to be operated by Starwood Hotels and Resorts Worldwide Inc. Authority officials said the hotels will help address a shortage of rooms nearby that has made it difficult for them to compete for the nation’s largest meetings and trade shows.
The project is the first phase of an expansion that would include a 1,000-room headquarters hotel, public parks, and a doubling of the convention center’s exhibit space. Those latter components will require tax increases or other government support that still must be approved by the state Legislature.
“This is another major step forward for us,” said James Rooney, executive director of the convention center authority. Rooney said he intends to seek legislative approval for the other components by the end of the year.
The hotels on D Street will be about seven and 13 stories and will add to a flurry of building activity on former industrial parcels between residential South Boston and the waterfront Innovation District. Hundreds of apartments are going up, along with an office building for State Street Corp. that is also being developed by CV Properties.
“We’ve got a big commitment to this area and a big stake in its success,” said CV Properties president Richard Galvin. “This project will help the convention center address its need for hotel rooms and it will really start to fill out D Street.”
City Councilor Bill Linehan, who represents South Boston, said neighbors are concerned about the pace of change in the area but welcome new job opportunities in the hospitality business. “For many of us, you lived on one side of1st Street and worked on the other,” Linehan said, referring to street that serves as the residential border of South Boston. “And this represents the renewal of the factories and fishing docks where people used to work.”
Elkus Manfredi Architects will design the hotels, and Suffolk Construction will serve as the general contractor.
CV Properties was selected for the project over Carpenter & Co., a Cambridge-based firm that developed the Charles Hotel in Cambridge and Liberty Hotel in Boston. Carpenter & Co.’s president, Richard L. Friedman, said, “We are disappointed, but this was a very tight project economically and we just didn’t want to promise more than we could deliver.”
CV Properties has not previously developed hotels, but it has built several other large projects in the region, including the massive Channel Center complex on A Street where State Street is building its tower.
Authority officials said CV Properties demonstrated an ability to move forward quickly and submitted the best overall proposal. Rooney has said repeatedly that the South Boston hall must add to its inventory of rooms quickly to compete with other cities that have 8,000 rooms or more.
CV Properties will pay about $3.4 million in rent to the convention center authority over the next 10 years. The authority bought the land on D Street for about $33 million last year. Officials said the hotel portion of the site is worth $18 million, and the authority will use the remainder of the property to build parking garages for the hotels and convention center.
Rooney said the authority had hoped for more rent from the developer and intends to push for more as the sides finalize a lease in the coming months.