The Real Deal New York

Peter Poon files plans for 36-story Times Square hotel

September 23, 2011 01:31PM
By Adam Pincus

Peter Poon Architects filed plans this month for a 36-story hotel at 136 West 42nd Street that includes 15,000 square feet of retail space created with the expectation that it can draw some of the throngs one block east from Times Square.

The 282-room hotel is being developed by hotel owner and manager Highgate Holdings and Chicago-based private equity firm Walton Street Capital, along with investors Crown Acquisitions and Ashkenazy Acquisition. The new building plans are under review, the city’s Department of Buildings website shows.

The 404-foot-building will have about 135,000 square feet of hotel space, the filing shows.

Once the hotel is built and opened — expected in 2013 — DiamondRock Hospitality, of Bethesda, Md., will buy it for approximately $128 million, or $450,000 per room, according to the company, which announced the purchase agreement in January.

Sources familiar with the deal said the building will be divided inside into two separate commercial condominiums, one for the hotel and one for the retail. The original investors including Walton Street, Crown and Ashkenazy, will be joint venture partners on the hotel piece, and will own the retail portion outright.

Peter Poon, Ashkenazy, Crown and Walton Street did not immediately respond to requests for comment. Highgate declined to comment.

Poon was active during the hotel development boom, designing structures such as 179 Varick Street, the Hilton Garden Inn at 63 West 35th Street, and Fashion 26 at 152 West 26th Street.

The West 42nd Street site, between Broadway and Sixth Avenue, is currently a vacant lot. The retail in the building, which will be completed in about two years, has not yet been priced, but the strategy is to attract destination retailers that will pull foot traffic toward Bryant Park, said the agent on the building, Bradley Mendelson, executive vice president at Cushman & Wakefield.

One inside source said ground-floor retail asking rents were expected to be about $800 per square foot to $1,000 per square foot once the properties had been built out.

Mendelson has the agency for nearly the entire block front. In addition to 136 West 42nd Street, he is representing space in the Knickerbocker Hotel at 1466 Broadway, and two Blackstone properties: 120 West 42nd Street and 1095 Sixth Avenue.

“There is no reason 42nd Street between Broadway and Sixth Avenue can’t become as vibrant as between Broadway and Eighth Avenue,” he said. “Needless to say, it is not that way now.”

Mendelson said ground-floor asking rents at 1095 Sixth Avenue are $550 per foot. Asking rents for the yet-to-be-constructed 120 West 42nd Street, which extends between 42nd and 41st streets, are lower. He said the blended asking rent is $300 per foot. He is also expecting to bring about 5,000 square feet of ground floor and 5,000 square feet of lower level space in the Knickerbocker building to market in about a month, but neither has an asking rent yet.

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