Hotel glut boosting deals in NYC

The oversupply has driven down prices

New York /
Oct.October 15, 2018 11:30 AM

From left: Viceroy Hotel at 120 West 57th Street and Hotel Indigo at 171 Ludlow Street (Credit: Viceroy Hotel and Resorts and IHG)

Hotel prices in the city have slid even as tourism surges.

Prices have fallen thanks to an oversupply of rooms, according to a New York Post report. In the past three years, prices of hotel rooms have fallen 30 to 50 percent.

That’s the result of a building boom that’s oversaturated the market. In 2007, there were 73,692 hotel rooms and 357 hotels, the report said. By 2017, that climbed to 115,532 rooms and 632 hotels. Plus, more than 18,000 additional rooms will enter the market by 2020.

For those looking to make deals, it’s an enticing environment. Developer Rotem Rosen and his partners at MRR Developoment bought Hotel Indigo on the Lower East Side for $162.5 million. And the Arden Group is reportedly in contract to buy the ground lease of the Viceroy Hotel at for $41 million, as The Real Deal reported. It last changed hands for $148.5 million in 2013.

But the market is bouncing back.

“Prices were low because we had an unprecedented oversupply,” said Jeff Davis, senior managing director of JLL’s hotels and hospitality group. “But that is already started to change. We are headed for an extraordinary recovery in the next 2 to 3 years.”

Real estate investment trusts, for example, saw a pronounced sell-off at the beginning of the year, amid investor pessimism. But hotel performance and an improved market has driven shares back up. [NYP] — Meenal Vamburkar


Related Articles

arrow_forward_ios
277 Fifth Avenue and Shokai Group's Shawn Xianyang Zhang (277 Fifth Avenue/Rafael Viñoly, Shokai Group)
Shokai Group picks up unsold NoMad condos for $81M
Shokai Group picks up unsold NoMad condos for $81M
Traffic was up 47.5 percent from last year, when coronavirus restrictions and concerns were more rampant. (iStock, Getty)
Black Friday retail traffic stuck below pre-pandemic levels
Black Friday retail traffic stuck below pre-pandemic levels
KPF's A. Eugene Kohn and 11 West 42nd Street (Google Maps, KPF)
KPF expands at Tishman Speyer building after sweetener
KPF expands at Tishman Speyer building after sweetener
Skylight Real Estate Partners founding partner Bennat Berger and 340 Old River Road in Edgewater (Google Maps, LinkedIn)
New firm pays $50M for Edgewater multifamily
New firm pays $50M for Edgewater multifamily
Tishman Speyer CEO Rob Speyer, Turner Construction CEO Peter Davoren and The Spiral at 66 Hudson Boulevard (Getty, Turner Construction, Tishman Speyer)
Build it and we will come: Turner Construction moves HQ to Tishman Speyer’s Spiral
Build it and we will come: Turner Construction moves HQ to Tishman Speyer’s Spiral
Donald Trump (Getty)
Pandemic dashed one-quarter of Trump’s NYC retail tenants
Pandemic dashed one-quarter of Trump’s NYC retail tenants
NYC hotels hoping for holiday business swell likely to be disappointed
NYC hotels hoping for holiday business swell likely to be disappointed
NYC hotels hoping for holiday business swell likely to be disappointed
Princeton proud: Eric Schmidt reportedly bidding to save club
Princeton proud: Eric Schmidt reportedly bidding to save club
Princeton proud: Eric Schmidt reportedly bidding to save club
arrow_forward_ios

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

Loading...