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Hotel Escalante's partial change to homes likely to start soon
By LAURA LAYDEN, lllayden@naplesnews.com
May 21, 2005

After rescuing Hotel Escalante from bankruptcy last year, Spiros Zorbalas decided to give it another chance at success. But he found the 71-room hotel in Naples difficult to run financially. So he came up with a new plan, one that creates a much smaller luxury hotel and paves the way for a new upscale development with 16 homes.

Development plans have been in the works for more than 10 months. The project, called Villas Escalante, has nearly all of the approvals it needs from city government. Work should begin within a few weeks, once the building permit is in hand. A fence will soon go up to make way for the demolition." It took four or five attempts with the city's design review board to get it where we want it," said Zorbalas, president of Real Estate Development Group Inc., the Naples-based company that won the right to buy Hotel Escalante.

Zorbalas' company made the best offer for the hotel, bidding nearly $12.7 million for it at a court-ordered
auction in February 2004. After opening in November 2000, the hotel struggled to make it. At the time of the bankruptcy filing, court records showed that Hotel Escalante had more than $15 million in debt. The former owners spent more than that to remodel. It was once a condo hotel called the Beachcomber.
" The hotel had too much debt on it," Zorbalas said. "Too much money was spent for what the market would allow for it." Now the hotel, on Fifth Avenue South near Third Street South, will shrink to 10 rooms, making it less costly to operate.

And the money made on the new homes can be used to pay off the debt on the hotel, Zorbalas said. Hotel Escalante will continue to operate on the south end of the property. Zorbalas said that's where the best rooms are and they'll stay the same, offering the same ambience and amenities. The new homes will be on the north side of the tract, close to Fifth Avenue." I think it's going to create a book end on Fifth Avenue South," Zorbalas said. "I think we really needed to do that because when you get past Third and Fifth Avenue, it just dies."

An architectural model,
looking southwest from
the intersection of Fifth
Avenue South and Third
Street South, shows the
new plan that will
develop the north side
of the Hotel Escalante
tract into residences.

The project includes six three-story townhomes, offering 3,200 to 3,600 square feet of living space, and six one-story flats, with nearly 3,100 square feet of space under air. A smaller garden flat will offer 2,000 square feet of air-conditioned living. Plans include three, 600-square-foot guest cottages, which were offered and sold to buyers of the main residences at Villas Escalante. A botanical garden will be added on the north side of the property to complement the lush garden on the south side. Marketing for the 16 homes began in January. They were sold out by April, despite their price tag. The average price was $2.6 million. Paul Graffy, a Realtor with Premier Sotheby's International Realty who helped sell the homes, said they went more quickly than he thought they would. The townhomes and flats offered at the new development were some of the highest-priced units of their kind in Collier County." There is definitely a demand for new product," Graffy said."

There is not much on the market right now in general. It really does tend to be a sellers' market." That aside, he said, he thinks the project's signature location in Naples was key in attracting buyers. Many buyers had to be turned away." It appeals to a very influential, affluent customer base, who really want to be on Fifth Avenue, but on the residential end of Fifth Avenue," Graffy said. "The price was at the very upper end. But we knew that the location was spectacular. There is no other setting like it in Naples, period." The project has attracted different types of buyers. Some are buying their first home in Naples, and others are buying their second, third or fourth home. Some are trading up. One buyer is a Marco Island resident, who purchased a home at Villas Escalante so he has a place to stay overnight — or even for a few nights — whenever he visits Old Naples.

Colorado residents Whitney and Vicki Ward have purchased a four-bedroom townhome that they plan to use as a second home. They were among the first buyers in the new development and this will be their first home in Naples. Whitney Ward is in the real estate development business in Steamboat Springs and Vicki Ward owns an interior design firm in Beaver Creek. They have family in Naples and have vacationed at Hotel Escalante for years. They heard about the plans for Villas Escalante while staying at the hotel in January. The couple, now in their 50s, expect to spend a lot of time in their new Naples home." We plan to have family get-togethers," Whitney said. "We just love Naples beach. It's sort of the multigenerational dream that many people have — getting their family together and spending quality time together." The Wards were drawn to the location and the quality of the project.

" It appears that the developer is going above and beyond in terms of his construction with the quality of the finishes," Ward said. "We are taking a bit of a leap of faith that he will follow through, as I'm sure he will." The project will take more than a year to build. It should be done by the fall of next year, Zorbalas said." It should be a nice addition to town," he said.