NEW YORK CITY-While a considerable amount of attention among big corporations based here seems to be on expansion into markets across the seas such as Vienna and Prague, there still is activity, albeit limited, right here at home. For investors, it is precisely the limited space and number of projects that can ever take place that make the few that do worth their time and money. Hotel occupancy remains the best in the country and room rental rates continue to remain high.

The research division of the National Hotel Realty, Lodging Econometrics, predicts a slowdown in hotel stays, thus hotel profits, in the year to come, but adds that the Big Apple is among the few that “shouldn’t decline much as their Active Development Pipelines suggest a lesser impact on occupancy.” With few projects in the works and high demand for rooms, most industry experts agree the hotel industry will continue to do well even as other cities may be hit hard by an economic slowdown.

Jones Lang LaSalle Hotels, for example, has generated more reports this year on the status of the European markets than any in America. The company has described Paris as “Europe’s most international hotel investment market.” Earlier this month it released findings that read, “Europe’s Continental hotel markets are showing strong signs of growth in the first year of the new Millennium, with hotel room yields increasing significantly across the entire continent, from Paris to Prague and Madrid to Milan.” Vienna and Prague are “riding the wave of recovery” and in an upswing. In fact, very few companies have focused very much attention on American cities, and even less on New York.

That’s not to say nothing new has been happening here. A spokesperson for Tishman Realty reports, “Despite one of the tightest hotel financing markets in a decade, Tishman Realty Corp. arranged the $300-million financing of the luxury, 863-room Westin New York at Times Square, which it is developing and building through its affiliates. The debt financing for the property was provided by lenders from five nations on three continents.”

The Westin New York at Times Square is the largest hotel to be built in Manhattan in a decade. It is to be connected to Tishman’s E Walk entertainment complex that opened last year on 42nd Street at Times Square. Of the financing, $182.5 million is “in the form of construction and term loans with a floating rate at a spread over LIBOR,” according to the spokesperson. These loans are from The Union Labor Life Insurance Co., of the US, a co-arranger; KBC Bank, NV, of Belgium, the other co-arranger; Bank Austria Creditstalt Corporate Finance Inc.; The Development Bank of Singapore Ltd.; The Prudential Insurance Co. of America; and Caixa Geral de Depositos, of Portugal. The other $117.5 million came from Tishman and its partners.

This summer a Washington-DC based developer acquired 1-3 East 35th St. in Murray Hill here on Manhattan to construct, as of right, a 74,000-sf, 29-story limited service hotel where a four-story office building now stands. Financing for this deal came through SWH Funding Corp. of Hackensack, NJ. Also, de Stefanis & Associates announced they would be acting as the owner’s representative for the construction of The Muse Hotel at the site of a 1912 office building here in Manhattan. The hotel is to become a 19-story, 200-key hotel with meeting facilities.

The New Yorker Hotel announced it is adding 10,000 sf of meeting space to its conference facilities, bringing the total to more than 30,000 sf. This fall, architect Stephen B. Jacobs and his wife, interior designer Andi Pepper, transformed 299 Madison Ave., a 12-story office building, into The Library. The hotel is a themed facility, inspired by yacht design to accommodate the odd, and often rather small room spaces, and the Dewey Decimal system. The 60-room hotel is near the New York Public Library on 41st Street, which reportedly will soon be renamed “Library Row.”

Overall, these conversions of office space, additions to existing hotels and construction of one large new Times Square Hotel are only adding “a few” more rooms to a very successful hotel market, according to experts. The market here is expected to continue to do well, but because new development is constricted, many eyes here look elsewhere for action.

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