Colony Square in Atascadero to get 88-room hotel, creekside dining and retail

After a long wait, Atascadero’s Colony Square will finally get its second phase, bringing a hotel and retail space to the city’s marquee development.

Much of Colony Square, which is anchored by Galaxy Theatres and separated from Sunken Gardens by Atascadero Creek, has remained undeveloped after the Great Recession drained momentum and money from the project.

But now, Jeff Nelson of The Oak Creek Co., a Santa Barbara-based development firm, has big plans for the area.

Oak Creek purchased two big lots in the development toward the end of 2015 — one that includes the theater, restaurants and shops and another vacant L-shaped parcel directly across from Que Pasa Mexican Cafe. Nelson declined to disclose financial information about the project.

Another developer owns the vacant lots in the middle of the square, along with the 1-acre lot near Round Table Pizza that runs up against Capistrano Avenue, according to Nelson.

Nelson plans to develop a two-story building on the vacant property. An 88-room boutique hotel will occupy the top floor, and retail spaces — likely restaurants and bars — will take up the bottom floor, he said.

“(The city) wanted to make this area really urban and not suburban, like the rest of Atascadero,” Nelson said.

The theater, restaurants and other shops in the developed parcel will remain in place and stay open throughout the development process, he said

The pedestrian bridge linking Sunken Gardens and Colony Square, which will likely be completed this fall, will help improve the walkability of the area, Nelson said. A creekside restaurant that takes advantage of the area’s natural resource may also be in the works, he said.

Nelson expects to break ground on the development by fall 2018 and plans to finish it by Christmas 2019.

“(Atascadero) has really been identified as the perfect middle-of-the-state location,” Nelson said.

Phil Dunsmore, the city’s community development director, said economic factors have stymied Colony Square.

A different developer got plans approved by the city in 2009 and 2012, but the recession prevented him from completing the project. Since the economy has rebounded, there’s been more interest in the area, he said.

Overall, Dunsmore said the multistory development fits perfectly into the city’s plans for the area.

“It’s part of what we’d like to see.”

This story was originally published October 22, 2017 at 11:21 AM with the headline "Colony Square in Atascadero to get 88-room hotel, creekside dining and retail."