Davis

NEW YORK CITY-Based on a recent study, the Alliance for Downtown New York estimates the number of hotel rooms will double over the next five years. Currently, there are enough projects in the predevelopment and early development stages to bring 2,000 units to the area according to Eric Deutsch, president of the alliance. “There’s no room left at the inn,” he says of the undersupplied market in lower Manhattan.

Previously, Downtoen and the financial district specifically were highly populated by week-day traffic but mostly empty on the weekend, but increased tourism, a tightening office market and the addition of several thousand new residents to the area are all factors driving additional people to the area and subsequently driving the hotel market.

Jeffrey Davis, a senior vice president at Jones Lang LaSalle Hotels, said the hotel boom is a trend that is happening all over Manhattan as a result of the slowing condo conversions. In the last six or seven months, “There’s been a pendulum swing of everybody looking at doing hotels.”

Prior to the swing, most developments combined hotel units with residential condominiums to meet the demand for condos. But as the trend cooled across the country hotel development came once again to the forefront. “We’re seeing a lot more interest since 9/11 because there is a lot more money and the banks are willing to lend on hotels again.”

At this point, Deutsch says most of the hotels being developed are small to mid-sized, but adds that larger hotels and ones that contain conference space are required to meet the area’s needs. In the next two to five years the majority of the planned hotels will come online. Overall the new projects are an equal mix of ground-up development and renovations from other property types.

Deutsch says that the hotels also vary in price points and some of the planned developments are among the trendier hotel brands. He cites the newly planned W Hotel, being developed by Joseph Moinian at 123 Washington St. as an example of a trendy hotel coming to the area.

Also on the drawing board are hotels projects at 217 Pearl St., 126 Water St., 99 Washington St., 100 Greenwich St., 50 Trinity Pl., 20 Maiden Ln., 8 Stone St. and 33 Beekman St.

Several hotels are also being significantly renovated to turn them into luxury spaces. For example, the 138-key Holiday Inn Wall Street was purchased by LaSalle Hotel Properties and is about to undergo a $60 million renovation project over the next 18 months.

That while all the projects in the pipeline will probably not come to fruition, Deutsch says, “For every project that falls off another will pick up.”

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