New York City is in the midst of a hotel boom, with Lower Manhattan — notably the Financial District and the Lower East Side — fueling the surge, as developers flock to its underserved neighborhoods.
“Overall, the city is undergoing the largest hotel boom in its history, adding over 18,000 rooms since 2010, with another 36,000 rooms in the pipeline and 12,600 of those rooms currently under construction,” says Mark VanStekelenburg, managing director of PFK Consulting USA’s CBRE Hotels division.
And Lower Manhattan is the darling of the statistics. “Lower Manhattan hosted 6,300 of these new rooms, a 28 percent increase, since 2010, with another 10,700 room in the pipeline, of which 5,600 are under construction, representing 26 new hotels,” adds VanStekelenburg.
The downtown hotel boom took root over a year ago, when InterContinental Hotels Group debuted in October 2014 the tallest Holiday Inn in the world, the 50-story, 492-room Holiday Inn Manhattan-Financial District at 99 Washington Street, managed by Virginia-based Crescent Hotels and Resorts.
Last year, the Lower East Side welcomed the April arrival of the hipster-friendly 11-story, 50-room Orchard Street Hotel at 163 Orchard Street, from owners Nico Moinian (son of real estate tycoon Morris Moinian) and Nader Ohebshalom.
Furnished Quarters also headed to Lower Manhattan, opening in November its first-ever Q&A Residential Hotel, at 70 Pine Street, a 66-story art deco historical landmark. Restaurateur Ken Friedman and Michelin-starred chef April Bloomfield will also debut a four-level restaurant and bar atop the 132-room property in 2017.
Steve Brown, CEO of Q&A Residential Hotel and Furnished Quarters says, “The Financial District has always been a center for business, hence the need for hotels. Now, it’s a hot area for residential, bringing new restaurants, nightlife and visiting families and friends to town.”
In December, InterContinental Hotels Group, along with Brack Capital Real Estate, opened IHG’s 5,000th property, the Hotel Indigo at 171 Ludlow Street on the Lower East Side. The 293-room property revels in its edgy environs, featuring a custom mural by graffiti artist Lee Quinones in its 14th floor lobby, as well as a rooftop bar and restaurant, Mr. Purple, operated by the Gerber Group.
“Hotel Indigo provided us, as a developer, with a unique opportunity to come up with a hotel experience that captures the true spirit of the neighborhood,” says BCRE CEO Isaac Hara.
Hospitality experts cite several factors in drawing developers to Lower Manhattan, including improvements to the transportation infrastructure (notably Fulton Center and the World Trade Center Transportation Hub) and the continued flow of Fortune 500 firms abandoning Midtown office towers for the likes of One World Trade Center and Brookfield Place.
“There is a need for significant additional hotel product in Lower Manhattan,” says VanStekelenburg. “The market has historically been underserved by hotel rooms, and the new supply is very broad in product type and brand, resulting in new marketing distribution and access to new frequent guest programs.”
Extended-stay properties, like the Q&A Hotel, are a key trend in downtown’s hotel boom. The $110 million AKA Wall Street — a partnership between Korman Communities, Shorewood Real Estate Group and Prodigy Network — will open this spring with 140 furnished suites at 84 William Street in the Financial District.
Brian Newman, VP of business development at Prodigy Network, says “The superb location, the strong economic drivers, and the historic features of the property made this the ideal location for the newest AKA extended-stay hotel. The Financial District is one of the areas where we see continued growth. It is one of the most active neighborhoods in Manhattan.”
Shorewood Real Estate Group and Prodigy Network have also teamed up for another Financial District extended-stay property, the 106-suite, 18-story Assemblage at 17 John Street, debuting in 2017.
Bjorn Hanson, clinical professor at NYU’s Preston Robert Tisch Center for Hospitality and Tourism, says extended-stay properties are in demand by visitors, but they also make financial sense for investors. “They have higher margins than ‘all hotels,’ because of lower marketing, payroll costs and slightly higher occupancies, mostly related to the longer length of stay and no or limited food and beverage service.”
Riff Hotels, launched by Manhattan real estate group Salt Equities, is also slated to open the 36-room, four-story Riff Hotel Downtown at 102 Greenwich Street in the spring. A downtown offshoot of its trendy, rock-and-roll Chelsea sibling, the loft-style rooms will also cater to extended stays by featuring kitchenettes.
And the hotel openings continue. In May, The Beekman, a Thompson Hotel, will open at 5 Beekman Street, a terra-cotta and brick architectural gem built in 1883. A 287-room, $350 million property, it will feature eateries by restaurateurs Tom Colicchio and Keith McNally.
“Lower Manhattan is undergoing an extraordinary transformation,” says Bruce Blum, co-founder and president of The Beekman’s developer, GB Lodging. “The Beekman is an ideal location that offers a singularly fresh experience that’s sustainable over time, such as being a block away from Fulton Center and two-and-a-half blocks away from the World Trade Center’s Class A office space.”
Also opening a block away from the World Trade Center later this year is the 185-room Four Seasons Hotel New York Downtown at 27 Barclay Street.
The uptick in Lower Manhattan lodgings bodes well for adjacent neighborhoods. “We expect it to compliment the rest of Manhattan’s inventory,” says VanStekelenburg. Examples include the opening last November of the trendy 122-room, 21-story Paul Hotel by Sharma Group Development at 32 West 29th Street in nearby NoMad, as well as the anticipated summer opening of the 194-room 1 Hotel Brooklyn Bridge located in Brooklyn’s new riverfront park.
But back downtown, VanStekelenburg says the area can sustain the boom. “We expect Lower Manhattan to be able to support significant additional hotel product as the historically strong corporate market is now supplemented by an increasingly strong leisure market.”
He adds, “While it may pull demand from other markets, the continued growth in visitors and significant complementary uses, such as office, retail and residential, that are under development are creating the critical mass for Lower Manhattan to stand on its own.”