Hotel bubble? Not according to these CRE execs

Sturner, panelists argue hospitality market is healthier than critics claim

TRD New York /
Nov.November 03, 2016 02:50 PM

New York’s hotel market has mostly produced negative headlines over the past year amid fears of oversupply and declining international tourism. But Norman Sturner thinks the worries are overblown.

“The fact of the matter is that New York has 54 million (annual) visitors,” he said Thursday morning at a panel discussion hosted by the Deal Flow Network and moderated by The Real Deal’s publisher Amir Korangy. Sturner said any conclusion that a minor drop in the number of visitors would cause major problems for the hotel market is “just silly.”

Sturner’s MHP Real Estate Services TRData LogoTINY is currently developing the 29-story Dream Hotel near Times Square.

Like Sturner, Robyn Sorid calls widespread pessimism over hotel oversupply misplaced. “We see it as an overreaction,” the co-founder of bridge lender G4 Capital Partners said. G4 is currently financing two new hotel developments — one in Williamsburg and one in Tribeca — and Sorid said traditional lenders’ reluctance to lend on hotel projects has created an “incredible opportunity” for her firm.

An analysis from TRD in April found that hotel permit applications began nosediving in 2015, suggesting the building boom could be over. However, a more recent review of filings shows that hotel units in 2016 have risen above last year’s total, but still lag the 2013 and 2014 boom years.

Another boon to the hotel market could be a law signed by Gov. Andrew Cuomo that imposes a fine of up to $7,500 on anyone in New York City who illegally lists an apartment on Airbnb. “With the latest legislation, in any residential zoning you’re not going to be able to have Airbnb tenants,” said James Nelson, an investment sales broker at Cushman & Wakefield.

Metropolitan Realty Associates’ Todd Bassen sounded a slightly more cautious tone. “With the strong dollar we’re certainly seeing less tourists today,” he said. “And the question, is with the economy improving (…) are we going to pick up some of that tourism from the rest of the United States?”

Related Articles

181 Varick Street (Credit: Google Maps)

Claremont Companies buys Soho Marriott for $59M

Rendering of the Staybridge Suites at 38-59 11th Street

Long Island City hotel project moves forward with construction loan

Heritage Equity Partners’ Toby Moskovits, Benefit Street Partners real estate managing director Micah Goodman, and the Williamsburg Hotel at 96 Wythe Avenue (Credit: Google Maps)

Toby Moskovits’ Williamsburg Hotel is headed for receivership following $68M loan default

461 West 34th Street with Marx Development Group's David Marx (Credit: Google Maps)

David Marx lands $202M refi for Hudson Yards hotel

30 West 31st Street and 52 West 36th Street (Credit: Google Maps)

South Korean firm snaps up two Midtown hotels for $137M

Brookfield Property Group CEO Brian Kingston and 652 11th Avenue (Credit: Google Maps)

Brookfield drops $83M on Hell’s Kitchen hotel

Mensur Cekic, Hudson Yards’ director of residences

From private tutors to meditation sessions, inside NYC’s new amenities battle

Lightstone Group CEO David Lichtenstein and Moxy Chelsea at 105 W 28th Street (Credit: Lightstone and Facebook)

Lightstone gave its neighbors $7M to build a hotel. Then the neighbors secretly went to war, suit claims.