Four Seasons Hotels and Resorts has committed to open a hotel in the yet-to-be constructed Gateway tower in downtown Minneapolis.

Developer United Properties said it has signed a term sheet with the Four Seasons to operate the hotel as part of the Gateway project, one of the final pieces of the development puzzle in a project that has faced several delays and design changes.

"We feel like the city deserves a five-star hotel and we're honored that they selected our site," said Bill Katter, president and chief investment officer of United Properties Development, in an interview.

The project received preliminary city approval at a Tuesday planning commission meeting. United Properties wants to build the tower on a parking lot which used to be home to the Nicollet Hotel on the corner of Hennepin and Washington avenues.

The building would include 280 hotel rooms, more than 530,000 square feet of office space anchored by RBC Wealth Management and 22 condos. There would also be a 455-stall underground parking garage.

The project would reach 503 feet making it one of the 10 tallest buildings in the city. According to Katter, the tower has approximately 34 floors of habitable space in addition to a mechanical floor, though city staff has declared the building as 37 stories.

The project is scheduled to break ground in late spring.

Four Seasons has been talked about as a potential partner for the project for years, but during the summer, Katter said plans to include a hotel in the project were in jeopardy because of shifting market conditions and lower room rates than what could make a high-end hotel viable.

United Properties has presented the city with several alternatives including a plan to have apartments and offices in the building or an all-office tower.

"In the short-term the market is not ideal for bringing a five-star hotel but in the long run it will be just fine," Katter said. "I think one of the benefits of United Properties and our platform and frankly our ownership is that we can afford to take a longer view for what's in the best interest of the community and the development of any particular piece of real estate."

The fact that the office portion of the tower is substantially pre-leased also helps, Katter said. The Four Seasons would operate the hotel, but United Properties would initially own the entire building.

Ronn Thomas, a broker with Cushman & Wakefield who specializes in hotel properties, said that while the current market might not be ideal for hotel construction as new supply is still being absorbed, downtown Minneapolis should be able to support a hotel of the Four Seasons' caliber in the future.

"The Four Seasons will be a different level," Thomas said. "I don't think there are any five-star properties downtown. A Four Seasons would be able to drive rates and lead the market."

It will be the first Four Seasons in the area. Four Seasons Hotels and Resorts didn't respond to requests for comment about the project Wednesday.

According to hotel data and analytics specialist STR, the average daily rate (ADR) in the Twin Cities market through the first nine months of 2018 was $124.71, a 7 percent increase compared to the same time last year. Those numbers benefit from a February bump due to Minneapolis playing host to the Super Bowl.

The planning commission approved one of the more controversial aspects of the building design, a porte cochere along Hennepin Avenue to allow vehicles to pull into the site and drop guests off that United Properties has said is a critical feature for the hotel.

However, commission members added a new condition to not allow the vertical vehicle ramp down to the garage from the access point that United Properties had originally wanted off the porte cochere and instead make it public space. The commission also sided with city staff to not allow a RBC sign at the top of the building. United Properties is considering an appeal.

If United Properties appeals, the project will need to be reviewed by the zoning and Planning Committee of the City Council and the full City Council. The City Council has already given the necessary approvals for the sale of the city-owned land where the Gateway tower is proposed to be built, and there is a signed redevelopment contract with United Properties. The closing on the land sale is anticipated for next spring.

United Properties, the development company of the Pohlad family, is involved in several other high-profile projects in downtown Minneapolis including the Dayton's Project, the former store that is being converted into an office and retail space; Target Field Station, which includes a hotel and Fillmore Theater music venue; and the Nordic mixed-use building it is developing in the North Loop.

Nicole Norfleet • 612-673-4495 Twitter: @nicolenorfleet