The group of investors will take over a stalled plan to build a 197-room hotel on the 3,800 s/f lot, said Ivan Hakimian of HPNY, the broker who represented the buyer and the seller.
The plans have yet to be approved by the city, which means the buyer reserves the right to change them, Hakimian said, adding that a recent upswing in traffic and tourism makes the hotel propsal a much more viable option than it had been in the past.
“That area is going to thrive, especially with the 9/11 memorial down there,” Hakimian said. “The retail is going to pick up and I think there’s going to be more demand for hotel space.”
A new report from Jones Lang LaSale indicated that the volume of hotel transactions in New York reached an all-time record high last year.
Eighteen transactions, comprising nearly $3.5 billion in assets traded, representing a 150 percent increase over 2010 volume, according to Jones Lang LaSalle Hotels’ Hotel Intelligence New York report.
The firm’s hotel transactions experts predict 2012 will bring much the same. Room supply is expected to increase by 3.4 percent with 17 new hotels totaling 2,700 new rooms expected to deliver in 2012.
“New York transaction activity in 2011 was driven by the perfect combination of strong operating fundamentals, quality product being brought to market and unprecedented REIT appetite,” said Arthur Adler, managing director and Americas CEO of Jones Lang LaSalle Hotels. “During 2012, REITs have been less acquisitive since their share prices declined in mid-2011, but are continuing to look for opportunities to upgrade their portfolios.”
The profile of hotel ownership in New York continues to evolve through economic cycles.
“REITs now own approximately 20 percent of the room stock in New York and as such are among the top three hotel owners in the City, along with owner/operators and private equity funds,” added Amelia Lim, executive vice president for Jones Lang LaSalle Hotels.
The report predicts New York is likely to garner international interest from high profile Middle Eastern buyers and select Asian investors.
Jeffrey Davis, managing director of Jones Lang LaSalle Hotels and head of the New York Investment Sales team, said, “With fewer assets expected to come to market, our clients should be able to tap into strong interest from private equity funds and off-shore investors, while the REITs could also play depending on how their share prices fare.”
New York’s hotel room revenue per available room (RevPAR) increased by 7.4 percent through year-to-date November 2011, driven by growth in average daily room rate.
Notwithstanding supply increases, Manhattan’s lodging fundamentals are expected to show ongoing strong growth in 2012.
Added Adler, “New York City has demonstrated the ability to absorb new supply as exhibited by its historically high occupancy rates. The City has rebounded from the recession, and the market will remain high on investors’ list of cities to target for investment in 2012.”
