Hotel Mania Hits City
THE NY SUN
BY MICHAEL STOLER
March 15, 2007
During the condo boom of two years ago, observers wondered whether there would be a dearth of hotel rooms in Midtown Manhattan. Several of the biggest names in New York City hospitality, including the Plaza and the Stanhope, succumbed to market pressures and were converted to luxury apartments.
Fast-forward to 2007: Hotel mania has supplanted condo mania in Manhattan, especially in Herald Square and Midtown.
In 2007 alone, it is estimated that 5,000 additional hotel rooms will hit the market in New York City. The new hotel rooms will replace the space lost in the conversions of landmarked Manhattan hotels, but experts say market conditions dictate that the new rooms will be in smaller, more widely dispersed, and often slightly less desirable locations.
Visitors to Macy's will have the opportunity to rent a room at one of the five hotels that will stand on West 35th Street between Fifth and Sixth avenues. Three new hotels are in various stages of construction on that stretch.
This spring, Brack Capital Real Estate USA will begin construction on a 30-story, 300-room hotel on the former site of a lot owned by Icon Parking lot at 6367 W. 35th St., for which it paid $31 million earlier this year. Directly next to this site, at 59 W. 35th St., the first few floors of foundation have risen on a limited-service McSam Hotels property. Earlier this year, McSam opened a limited-service hotel, the 70-room Hotel 373, at Fifth Avenue and East 35th Street, with a Starbucks in the lobby.
Two other hotels are on this block, the 170-room Hotel Metro at 45 W. 35th St. and the 131-room Comfort Inn Manhattan at 42 W. 35th St. Last fall, the neighborhood welcomed a 92-room Wingate Inn, at 235 W. 35th St., between Seventh and Eighth avenues.
McSam Hotels, one of New York City's most active developers of limited-service hotels, is in the early stages of development of another limited-service hotel, at 6062 W. 36th St., directly behind the construction of the developer's planned hotel on West 35th Street. On West 37th Street, on the site of a former parking lot, a local developer, the Synergetic Real Estate Group, plans to begin construction of a boutique hotel at 3133 W. 37th St.
If visitors are interested in staying at a five-star hotel in Midtown, they will have wait until 2008, when a new luxury hotel will be located in the base of the 600,000-square-foot mixed-use building at 400 Fifth Ave. between 37th and 38th streets. The hotel will occupy approximately 200,000 square feet of the building, with the upper floors consisting of residential condominiums with hotel services available.
"The upper end of the hotel market will remain very tight, with further escalating room rates and higher barriers to entry," the chairman of the national real estate practice of Greenberg Traurig, Robert Ivanhoe, said. "There is little prospect of five-star hotels in prime locations since other users have been viewed as economically best in these locations.
"Thus, the secondary locations with two- and three- star hotels will continue to be built to meet this demand, but with lower barriers to entry and less desirable locations, will not restore what has been removed from the market, properties such as the Plaza, the Stanhope, the Mayflower, and a portion of the rooms at the St. Regis and the Essex House," he said.
Construction is scheduled to start before the end of the year on two other boutique hotels, The New York Sun has learned. One block east of the Empire State Building, on the northeast corner of Madison Avenue and East 33rd Street, a European investment group plans to begin construction of a 34-story, 225-room luxury hotel. In the fall, a prominent local investment group will begin construction of a boutique four-star, 26-story hotel with about 140 rooms near 31st Street and Madison Avenue.
In light of the planned closing of the 1,700-room Hotel Pennsylvania, across the street from Madison Square Garden at 401 Seventh Ave., the rise in hotel construction in Midtown South is desperately needed.
The Sun has learned that a final decision is expected by management of Pakistani Airlines to market for sale the Roosevelt Hotel across from Grand Central Terminal. Many real estate experts believe it will sell the building for office conversion because of the site's proximity to Grand Central.
A total of six hotels are in various stages of construction south of the Port Authority Bus Terminal near 42nd Street and Eighth Avenue. These properties are a 20-story, 79-room hotel at 305 W. 39th St.; a 32-story hotel at 309313 W. 39th St.; a 35-story hotel at 343345 W. 39th St.; a 33-story hotel at 326332 W. 39th Street; a 33-story hotel at 326332 W. 40th St., and a 30-story hotel at 306 W. 39th St., at the southwest corner of West 39th Street and Eighth Avenue.
Last month, Dubai Investment Group finally closed on the acquisition of 1466 Broadway, a.k.a. 6 Times Square, the former Knickerbocker Hotel. As previously reported, the new owners are planning to convert the office building into a five-star hotel.
The winning developer for the hotel to accompany an expanded Javits Center is expected to be announced by the state sometime around April 1. The new hotel would have a minimum of 1,000 rooms, with requisite meeting rooms, ballrooms, restaurants, and retail. The hotel would occupy the site on Eleventh Avenue between 35th and 36th streets.
An extended-stay hotel is scheduled to open at the nine-story former office building at 1265 Broadway, also known at 890 Avenue of the Americas.
Another parking lot will be replaced by a limited-service hotel, at 3846 W. 33rd St., across from the Empire State Building.
The Sun has learned that the Fitzpatrick Hotel chain has decided not to move ahead with building a hotel at the JD Carlisle mixed-use residential development site on the former parking lot on Sixth Avenue between 29th and 30th streets.
Hotelier Morris Moinian, the owner of the Chemist Club Hotel on East 40th Street between Park and Madison avenues, plans to open his second hotel in Manhattan. In 2009, he will open Intercontinental Hotel's new boutique chain, Hotel Indigo, at 127 W. 28th St. between Sixth and Seventh avenues. The 20-story hotel would have a total of 122 rooms.
Another five-star hotel will be rising on Lexington Avenue at 53rd Street, near the legendary Waldorf-Astoria. The hotel, developed by Aby Rosen's RFR Holdings, would serve as the base of a mixed-use tower on the former site of the YMCA at 610 Lexington Ave. A 207-room hotel would occupy the lower floors, and 17 condominium units would be located on the top 11 floors.
In January, the Hotel Mela, a luxury boutique hotel, opened to the public. It is the first new construction on what is often referred to as Hotel and University Club Row, on West 44th Street between Broadway and Sixth Avenue. The former office building now has 229 rooms on 17 floors. The hotel is just a couple of doors down from hotelier Vikram Chatwal's upcoming Lamb's Club Hotel at 130 W. 44th St. between Sixth Avenue and Broadway. The hotel is scheduled to open early next year with 72 rooms in a conversion of the landmarked Lambs club, designed by Sanford White in 1904.
Bryant Park may soon be the home of two new hotels. A new hotel is planned for the lower portion of a proposed 31-story mixed-use tower at 14 W. 40th St. adjacent to the HSBC Bank Tower and directly south of the Knox Hat Building. The second hotel is slated to open in 2008 at 485 Fifth Ave. in the former Rogers Peet Building. In the fall, Global Hyatt Corp. paid about $136 million for the building, and real estate sources said the property would be developed as a new boutique hotel and have about 200 rooms.
A few blocks away is the 188-room Eastgate Tower Hotel at 222 E. 39th St. The new owner, Peninsula Hospitality, is planning to renovate the hotel and make it a Marriott Residence Inn.
Mr. Stoler, a contributing editor to The New York Sun, is a television broadcaster and a senior principal at a real estate investment fund.
© 2007 The New York Sun