After years of trying, 330 Hospitality LLC has decided to move on from redeveloping the property at the intersection of Rehoboth Avenue and State Road in Rehoboth Beach.

Since 2019, 330 Hospitality, a business partnership between Lockwood Design and Construction’s Don Lockwood and former Gallo Realty owner Bette Gallo, had tried to develop the split-zoned lot, located at 330 Rehoboth Ave., into a hotel.

The lot was about 42,500 square feet, of which about 23,000 square feet along Rehoboth Avenue is zoned C-1 commercial, and about 19,500 square feet along State Road is R-1 residential. The 330 Hospitality group was unsuccessful in rezoning the residential portion to commercial. In the end, the residential portion was subdivided into three parcels – two rectangular single-family home lots facing State Road and one irregularly shaped pentagon that abuts the commercial portion.

The commercial property and the irregularly shaped residential lot were recently listed for $7.995 million. The two rectangular single-family home lots are under contract.

Local Realtor Lee Ann Wilkinson, the daughter of Bette Gallo, said after years of trying, her parents, who are both in their 90s, are getting too old and don't want to deal with it anymore. Lots of money was lost on engineering costs, and now there’s also not enough land for a hotel, she said.

Wilkinson, who's also the listing agent, said she envisions some kind of mixed-used structure with commercial on the first floor and condos above.

For many years, the property was home to the Sea Horse Restaurant, but it also served as home to Ocean Atlantic Sotheby’s for 15 years and, most recently, Lockwood Design and Construction.

Rehoboth Ave. Ext. property for sale

The Rehoboth Avenue property isn’t the only gateway into Rehoboth Beach that has a highly noticeable property up for sale.

Visible from Route 1, 37128 Rehoboth Ave. Ext. is a triangle-shaped lot sitting at the fork of Route 1 and Rehoboth Avenue Extended heading into Rehoboth Beach. The property has a large warehouse on it, but also includes the building that was the longtime home to The Point Coffee Shop & Bakery, which closed in March after 15 years of business. The warehouse was built in 2018 and has decorative windows and balconies.

It’s been listed for sale for $4 million since late May.