More delays for One Rehoboth Hotel project in Rehoboth Beach

The demolition of the remaining two buildings in the footprint of the One Rehoboth Hotel project in Rehoboth Beach has been delayed until this September.

The demolition of the two buildings – the former Dolle’s Candyland property on the Boardwalk and Kohr Bros. Frozen Custard on Rehoboth Avenue – was originally expected to take place months ago, after the annual Sea Witch Festival at the end of October. The city announced the further delays in a press release Jan. 8.

When complete, the 60-room hotel will stretch the width of the block from Rehoboth Avenue to Baltimore Avenue and front the Boardwalk. The development team is a partnership between Grotto Pizza and Onix Group, a real estate developer from Kennett Square, Pa.

If the demolition were to start now, that would result in an opening toward the end of the 2027 season, which would be extremely challenging, said Jonathan Silver, Onix Group vice president, in an email Jan. 14. Waiting to start in September allows for a much more manageable opening window, likely in March or April of 2028, he said.

“From the start, our goal has been to schedule the project so it only misses one summer season,” said Silver, estimating construction will take approximately 18-19 months. “Completing a project of this scale, along with staffing and training for both the hotel and our tenant spaces in July or August, would be very difficult.”

In addition to the two buildings that are still standing, the footprint of the hotel includes the former Grotto Pizza location next to the Rehoboth Beach Patrol headquarters and the old Sirocco Motel on Baltimore Avenue. Both of those structures were demolished in late spring and early summer of 2025.

With construction, especially foundation work, unforeseen conditions can arise, and this adjusted schedule provides more flexibility if issues are encountered, said Silver.

“A July or August 2027 completion left little room for error. Any delay could have resulted in missing an additional summer season. This approach better positions the project with our long-standing goal of only missing one season,” said Silver.

Silver said he doesn't expect there to be significant work taking place on site between now and when demolition resumes. It’s possible there may be some utility relocation or preparatory work, but the development team is still evaluating that scope and what impact it would have, he said.

This project has been on the city’s radar since late 2022. There will be retail/restaurant space at ground level on the Boardwalk, while the hotel is planned for the top three floors. A pool would be located in the middle of the property, immediately to the east of the Thrasher’s French Fries building. Including everything except the underground parking, the total floor area for the 42-foot-tall building is 57,705 square feet.

The city’s planning commission first approved the site plan in January 2025. In December, the planning commission approved an amendment to the site plan allowing the project to have one level of underground parking that includes a lift system to meet parking requirements. The original plan called for two levels of underground parking.