Believe it or not, the city’s golden age of new hotel development is just about over.
That’s insane, right? What about the giant new Edition Times Square and the Virgin Hotel in NoMad, both set to open in 2018?
Well, they’ll be the exceptions beyond early next year, by which time the great wet bar in the sky will largely have run dry.
Some 6,000 new rooms opened in town last year, and 6,000 more are coming on line in 2016 — part of the city’s greatest wave of inn-creation since the 1930s.
More than 30,000 new hotel rooms have checked into Gotham in the past seven years, swelling the city’s total inventory to a record 102,000 rooms.
The new hotels range from having a handful of rooms to more than 900. NYC & Co. reports that 53 new properties added 9,041 rooms to the inventory from January 2014 to October 2015 alone.
Hotel industry research firm STR counted 13,583 rooms scheduled to open here in 2016 “and beyond” — more than twice as many as runner-up Houston can boast.
So how can the boom be over? Simple: The great bulk of those new places will be finished before what STR calls “beyond.”
“After the first quarter of 2017, we’ll see a precipitous drop in new hotels openings,” said CBRE vice president and hotel specialist Bradley Burwell.
Last year saw the openings of such high-profile properties as the Knickerbocker on West 42d Street, the Baccarat on West 53d Street and the New York Edition at Madison Square.
However, beyond what’s in the pipeline, “the market is definitely slowing down,” said Lodging Advisors’ co-founder Sean Hennessey. “We will see fewer new hotels.”
It’s even possible the number of rooms will shrink if certain large properties are razed.
“If East Midtown rezoning comes through later this year and Grand Central air rights can be transferred to the site, the [1,000-plus-room] Roosevelt would be converted to offices in an instant,” Burwell predicted.
(However, the extant hotel stock got a breather last week when Steven Witkoff shelved, for the moment, plans to replace the Park Lane with a new condo tower.)
Burwell noted that most projects now in the works “were envisioned more than three years ago” when developers grew queasy about demand for condos, but were encouraged by “tremendous double-digit growth in average daily hotel room rates.”
This year’s planned major openings include the 641-room Riu Plaza on Eighth Avenue, and the smaller but glam Tommie Hudson Square, the AKA and Beekman in FiDi, Aby Rosen’s Howard on Chinatown’s fringe, the Four Seasons on Barclay Street and SLS on Park Avenue South.
So how can the boom be over? Simple: The great bulk of those new places will be finished before what STR calls ‘beyond.’
But major launches scheduled after them are few and far between.
The drop-off won’t be due to diminished demand. Visitors to the city swelled from 50 million in 2010 to 58 million in 2015.
Forecasts are for upward of 62 million visitors by 2020.
Despite the new inventory, Burwell says the city has maintained 85 percent occupancy, which he calls “unheard of in any market.” Hennessey said of slightly lower room rates: “They’ll remain stagnant for a year or 18 months or so and then recover as new openings are absorbed.”
As a result, the white-hot hotel investment/sale market — dramatized by Anbang Insurance Group’s $1.95 billion purchase of the Waldorf Astoria in late 2014 — won’t likely cool for some time.
However, the frenzy to open limited-services hotels such as Hampton Inn and Comfort Inn, which require smaller footprints, may have peaked. And rapidly accelerating costs of larger sites are making development of larger, full-service properties prohibitively expensive even in a thriving market.
Eden Fine Art, a retail gallery at the William Kaufman Organization’s 437 Madison Ave. since 2004, is doubling its space on the 50th Street corner to 3,865 square feet as part of a 12-year lease renewal.
Eden has tapped ODA Architecture to redesign the gallery, which will reopen this spring. Retail asking rents in the 850,000-square-foot office tower range from $500 to $600 per square foot. Michael Lenchner of Sage Realty Corp., Kaufman’s leasing and management division, repped the ownership in-house, while Lansco’s Howard Dolch and Robin Abrams consulted for Eden.
The gentrification of Bushwick continues apace with developer Louis Handler’s Willtrout Realty’s planned new five-story, 63-unit apartment building on a former vacant lot at 949-963 Willoughby Ave.
The project will proceed thanks to a $13.2 million construction loan arranged by Eastern Union Funding, which placed it with Investors Bank.
Eastern Union funding director David Eisen said Bushwick is especially attractive “as residents priced out of Williamsburg and Greenpoint seek more affordable places to live.”
MetaProp NYC, the West 21st Street outfit that calls itself the city’s largest real estate technology startup accelerator, is aiming for a higher public profile. It’s hired former CBRE public relations and marketing guru Phil Russo as a founding partner of its newly launched MetaProp Advisors division and chief communications strategist for all of MetaProp NYC’s businesses.
MetaProp co-founder Aaron Block said Russo’s arrival “will greatly accelerate our communications strategy and overall growth.”