Building a hotel now cheaper than buying one

TRD New York /
Oct.October 24, 2011 11:15 AM

Building a hotel in New York City may be cheaper than purchasing one, Bloomberg News reported, as demand from investors helps drive hotel property prices through the roof. According to hotel consultancy firm Lodging Econometrics, New York developers are planning to open around 50 new hotels in the city before 2013 and 68 more by 2014.

“Right now, it can be cheaper to build,” Bruce Ford, senior vice president of sales at Lodging Econometrics, told Bloomberg. “Most developers would argue that it’s better to open a hotel in 2013 than in 2012, but in New York City, a market that leads the cycle, next year should be good.”

Manhattan hotels have sold for an average of $505,157 per room so far in 2011, up from $344,799 in 2010 and $413,644 in 2009, according to data from research firm Real Capital Analytics. Companies such as DiamondRock Hospitality and Hidrock Realty, on the other hand, are building hotels for just $300,000 to $450,000 per room.

“As long as a new build is around $400,000 to $500,000 a key, you can build all day long in New York because it’s in line or below what you would pay for an existing building,” hotelier Ian Schrager said in an Oct. 7 interview with Bloomberg. [Bloomberg]


Related Articles

arrow_forward_ios
RedSky’s Ben Bernstein and 182 Flatbush Ave (Credit: Google Maps)

RedSky sells building across from Barclays Center as partner liquidates holdings

Hidrock CEO Abraham Hidary and 72 Nassau Street (Credit: Hidrock and Google Maps)

Hidrock buys FiDi dev site from former Helmsley partner

Real Capital Analytics data showed that New York’s multifamily market had a very slow July. (Credit: iStock)

New NYC rent law “beginning to shut down investment”

Robert M. White, Jr., founder and president of Real Capital Analytics

Real Capital Analytics raises $115M to buy out Daily Mail & General Trust’s stake

Hidrock seeking up to $1,100 a foot with Garment District office condo conversion

Hidrock seeking up to $1,100 a foot with Garment District office condo conversion

Commercial property sales hit near record-breaking total of $562B last year

Commercial property sales hit near
record-breaking total of $562B last year

Hidrock pays $41M for FiDi package that could give way to resi development

Hidrock pays $41M for FiDi package that could give way to resi development

The 10 biggest Queens deals in Q2 2018

The 10 biggest Queens deals in Q2 2018

arrow_forward_ios
Loading...