“Condotel” development on the upswing

Cities like New York lead development of properties combining luxury homes, hotel amenities

New York /
Jul.July 02, 2014 04:05 PM

Combination hotel and condominium properties, a hot concept prior to the real estate crash in 2008, are now back in force.

Major U.S. cities like New York City, Miami and Los Angeles are leading the development of properties that combine a demand for luxury homes with high-end, full-service hotel amenities at premium prices.

“You are seeing more and more condos that are associated with a hotel brand,” LeFrak Organizaton chief Richard LeFrak, who is developing 1Hotel & Homes South Beach with investor Barry Sternlicht, told Bloomberg News. Residents, he said, only need to “make one phone call. ‘Change the linens, put food in my fridge, get my car ready.’ They don’t have to bother with organizing a lot of things. It’s a big draw.”

The U.S. hotel industry, on the rebound since the financial and property-market meltdown in 2008, saw room rates reach a record high in the first five months of 2014, according to data from research firm STR cited by Bloomberg. Through May, the average hotel price hit $113.58 per night, up 4.1 percent year-over-year.

Still, hotel financing can be difficult to obtain, making the “condotel” model an attractive one for developers seeking financing. In some cases, residences are connected to the lodging segment so that owners can take advantage of hotel amenities, thus enabling developers to ramp up unit prices.

“It’s still hard to finance a pure hotel play,” Bruce Ford, senior vice president and director of business development at Lodging Econometrics, a Portsmouth, N.H.-based consulting firm, told Bloomberg. In big cities, he said, “it’s just very expensive to build. So until the hotel is completed and returns money, you can sell condos and finance the hospitality component. The hotel component in turn will provide you with long-term cash flow.” [Bloomberg News]Julie Strickland


Related Articles

arrow_forward_ios
Clockwise from left: John D. Rockefeller, Izzy Englander, Steven Mnuchin, David Koch, Jacqueline Bouvier, and William Zeckendorf (Credit: Getty Images and StreetEasy)
For 15 years, David Koch lived at the world’s “richest building”
For 15 years, David Koch lived at the world’s “richest building”
Front & York, Beckford House & Tower and Aman New York Residences (Zillow, Streeteasy, Aman New York, iStock, Illustration by Kevin Cifuentes for The Real Deal)
Bye bye, sugar high: New dev contracts slow in June
Bye bye, sugar high: New dev contracts slow in June
Vlad Doronin with 205 East 85th Street, 1059 Third Avenue and 730 Fifth Avenue (Getty, Brown Harris Stevens, Corcoran, Aman)
Mystery buyer drops $76M on Crown Building condo
Mystery buyer drops $76M on Crown Building condo
From left: 56 Leonard Street and 443 Greenwich Street with Justin Timberlake and Jessica Biel (Getty, StreetEasy, iStock)
TRD Pro: Ranking Tribeca’s priciest residential deals of the past year
TRD Pro: Ranking Tribeca’s priciest residential deals of the past year
Carlton Hobbs with 60 East 93rd Street (Getty, Google Maps)
One of NYC’s widest townhouses sells for $53M
One of NYC’s widest townhouses sells for $53M
366 State Street and 37 Sidney Place in Brooklyn (Corcoran, Zillow)
Passive house asking $15M tops Brooklyn contracts
Passive house asking $15M tops Brooklyn contracts
Wall Street bonuses are booming, transforming the luxury market
Wall Street bonuses are booming, transforming the luxury market
Wall Street bonuses are booming, transforming the luxury market
Gregory Abbott and 1020 Fifth Avenue (Christies Real Estate, Getty, Streeteasy, Columbia University, Eden, Janine and Jim via Flickr)
College admissions scammer unloads $14M apartment
College admissions scammer unloads $14M apartment
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...