The demand for hotel rooms in New York City is on the rise. Several office buildings in the Big Apple are being converted into lodging properties. The former 133,000 square-foot office building at 28th Street and Broadway has just undergone a major transformation into a chic hotel.
In 2007, this Madison Square Park area property was in poor condition. During April 2012, however, the building reopened as the 168-room Parisian-style property – the NoMad Hotel – at 1170 Broadway. The stylish conversion (with interior design by Jacques Garcia) was a group venture with the Sydell Group, Ron Burkle and Square Mile Capital. The NoMad Hotel (and a gourmet restaurant run by Daniel Humm and Will Guidara of Eleven Madison Park) should attract visitors to this rebuilt New York City neighborhood.
Around six similar renovations are on the go in the Big Apple – especially in Midtown South and the Financial District. Millions of square feet of new office space are being added through the new World Trade Center development. According to William Geiler, Highgate's executive vice president of development and acquisitions, Highgate, the Carlyle Group, and Trabuco Associates plan to change a landmark office building at 170 Broadway into a 245-room extended-stay hotel.
Recently, the New York-based GB Lodging bought 5 Beekman St. - an abandoned 19th-century building with a stunning atrium in the center of the Financial District. The company plans to convert the property into a 297-room hotel with 90 condo residences.
Bruce Blum, president and co-founder of GB Lodging, explains the reasoning, "Given the location by downtown, near the 9/11 memorial, across the street from City Hall Park, a block-and-a-half from Fulton Street metro hub, it's a transitioning neighborhood."
With their central locations and commercial zoning, older office buildings have a definite appeal for NYC hotel developers. Yet for years, investors had wondered about the best use for aging office properties. Generally, the buildings were turned into rental apartments or condos. The current trend, however, to turn offices into hotels is revitalizing areas of New York that lack vibrancy after work hours and on the weekend.
The Big Apple is alive with new hotel projects. Tourists and corporate travelers are driving rates and occupancies within the lodging sector. According to CBRE Econometric Advisors, the city added 4,100 guest rooms in 2011 to its hospitality industry. The NYC hotel sector is not expected to lose any ground in the present year.
Within the same neighborhood as NoMad, Marriott International Inc. plans to purchase the century-old Clock Tower building and begin another hotel conversion. In addition, Felcor has bought the Knickerbocker Hotel (now an office building) near Times Square with plans to bring the property back to its original style.
As well, the Refinery, a 197-room hotel (complete with rooftop bar) on 38th Street between Fifth and Sixth Avenues, should open in autumn 2012. The Aini and Vaid families (with Highgate Hotels as a consultant) will convert the former hat factory (and later, office building) into a splendid hotel.
Obviously, office conversions are not easy projects. The buildings have larger floor plates (not ideal for hotels) and institutional hotel brands prefer traditional layouts. Yet Christina Zimmer, principal in charge of hospitality architecture at Stonehill & Taylor (architect and design firm for the Refinery), gives one reason why hotel developers choose office building for conversion purposes,
"You end up with some quirky layouts. You're getting a slightly different product, rather than something cookie cutter," states Zimmer.
Despite all the hotel openings, industry experts believe that the demand for NYC guest rooms will still exceed the present supply. According to the latest projections by CBRE Econometric Advisors, the NYC hotel occupancy rate in 2012 should rise by 0.6 percentage points to 81%. The national rate, however, should remain the same at 65.9%. The average daily rate should also rise by 4.5% to $243 in 2012. Manhattan needs even more hotel rooms.
Image courtesy of hotelchatter.com