PALM SPRINGS, CA—Hyatt's sister brand Andaz has signed a long-term management lease agreement with Rael Development Corp. for a 150-room hotel development currently under construction in Downtown Palm Springs. The terms of the lease were not disclosed. The hotel will be named the Andaz Palm Springs, and is expected to open in late 2016.

“Downtown Palm Springs really has grown in its retail offerings over the last five years, and we have seen the emergence of an upgraded hotel stock during that period as well,” Kimo Bertram, VP of real estate and development in the Americas at Hyatt, tells GlobeSt.com. “As a result, we have seen Palm Springs reemerge as the urban destination within the Coachella Valley. We were very excited that we could offer an urban leisure destination in the Coachella Valley that resonates with our Andaz guests, who is looking for a little more energy out of a hotel stay than some of the traditional resorts in the valley.”

The hotel will offer guests looking for a high-end experience 150 guestrooms and 17 suites, along with a host of building amenities, including an elevated terrace, outdoor pools and gardens, along with 25,000 square feet of retail and meeting space. “What you have seen over the last five years is a lot of mid-scale boutiques entering the market, and we think there is an opportunity to capture higher-end guests looking for a higher-end boutique experience. That is really the target market that we are going after,” says Bertram. “We are trying to create an urban leisure oasis. It isn't going to be a traditional tall hotel tower. You are going to find a much more elegant and exciting experience, while highlighting the natural beauty of Palm Springs.”

Rael Development Corp. assembled the land for the project nearly a decade ago, and has since seen the area grow and flourish. “We could see the potential renaissance that was set to take place in the City of Palm Springs,” Graeme Rael, a principal at Rael Development Corp., tells GlobeSt.com. “Most of the development in the 80s passed over Palm Springs for cities farther down valley like La Quinta and Palm Desert, to name a few, but the cultural heart of the Coachella Valley remained in Palm Springs.”

A ground-up hotel development in Palm Springs is somewhat unusual. Most of the projects underway are redevelopment projects of existing motels. According to Rael, this project was made possible when the city adopted a new general plan that allowed for increased densities in key locations, including this downtown site. “We viewed this as transformative project, one that would re-shape downtown and rejuvenate the entire City of Palm Springs,” Rael adds. “While the city had seen and continues to see renovations of the older motels and hotels in the area, this is a unique opportunity to build a sophisticated high-end resort at a scale and quality that hasn't been seen in Palm Springs for decades.  It is a unique opportunity and we are determined to deliver a magnificent project befitting the spectacular landscape and rich history of Palm Springs.”

The Palm Springs market is certainly tightening. Last year, Realty Mogul crowdfunded the first ever hotel, the Hard Rock Palm Springs, which sold out in only three months.