For years, Brooklyn has been a difficult place to find a hotel room. But the number — and quality — of Brooklyn hotels is set to soar, thanks to nearly 20 new projects planned for the borough.
The number of Brooklyn hotel rooms is slated to jump by more than 25 percent by 2018, from roughly 4,000 to more than 5,000, according to data from the hospitality analytics company Smith Travel Research.
“There is a lot more interest in Brooklyn than there has been historically,” said Sean Hennessey, founder of the consulting firm Lodging Advisors.
Several of the projects will be significantly larger and higher-end than most of the 60-odd hotels already up and running in the borough. Right now, there are only three Brooklyn hotels with 200 rooms or more, but six of the new ones will have at least that many rooms: The most prominent of those include 1Hotel in Brooklyn Bridge Park, being developed by Toll Brothers and Starwood Capital; Second Development Services’ 95 Rockwell Place near the Brooklyn Academy of Music; the revamped Bossert Hotel in Brooklyn Heights, a project by David Bistricer and the Chetrit Group; and developer Juan Figueroa’s 250-room hotel next to the historic Williamsburgh Savings Bank building at 155 Broadway.
These projects also stand out for their individualized branding and stylish décor, bringing a new level of luxury to a borough that is dominated by chains such as Holiday Inn, Hampton Inn and Clarion.
“Those are going to be high-end hotels on the level of what you would see in Manhattan,” said Brian Leary, a managing partner at commercial brokerage CPEX, who worked on the 95 Rockwell Place deal. “They are bringing us to a whole other level.”
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A commanding presence
For decades, Brooklyn has been “underserved” when it comes to hotels, Hennessey said.
Brooklyn has 2.5 million residents and 4,000 hotel rooms, according to statistics from the city. By contrast, less-populous Manhattan — 1.6 million is the latest head count — had more than 90,000 rooms as of the beginning of 2012, according to published reports.
That wasn’t always the case. Brooklyn had a thriving hotel sector in the 1950s, said Leary, who grew up in the borough. But by the 1970s, an onslaught of urban problems — stagflation, white flight and the city’s bankruptcy — had decimated the hotel market. Epitomizing the fall was the 19th-century St. George Hotel in Brooklyn Heights. In its postwar heyday, the hotel boasted the largest saltwater swimming pool in the U.S. and counted Frank Sinatra, Katherine Hepburn and Duke Ellington among its guests. In the 1970s, the pool was drained and the hotel was converted to mostly apartments. A fire in 1995 eventually tore through the few remaining hotel rooms.
These days, the 666-room New York Marriott at the Brooklyn Bridge, on Adams Street in Downtown Brooklyn, is considered the borough’s only successful large hotel, industry experts said. The Marriott’s main draw is that it offers enough meeting space to host large conventions, a component often thought necessary for a big hotel not near an airport or tourist destination.
“The prior viewpoint was that you would have to build another Brooklyn Marriott — that has meeting space — or a small hotel,” Hennessey said.
But that began to change last year, with the opening of two pricey new hotels in Williamsburg. At Two Trees Management’s trendy Wythe Hotel, at Wythe Avenue and North 11th Street, the 73 rooms have furniture custom-made from reclaimed pine and locally sourced mini bars. Prices ranged from $280 to $910 per night last month.
The Chetrit Group transformed the 64-room Hotel Williamsburg on North 12th Street — the property alone cost $33 million, or $520,000 per key — into the King & Grove Williamsburg. The revamp included a rooftop terrace, pool and complimentary bike rentals. A Friday stay costs $360 to $760 pretax, according to the hotel.
“The Wythe and others have shown that [Brooklyn hotels] can command a presence,” said Hennessey.
Now, that ripple of development is spreading.
Chetrit is joining with Bistricer to resuscitate the Bossert, a century-old hotel owned for years by local mega-landlord the Jehovah’s Witnesses. The pair paid a reported $81 million for the property and will re-brand it with the posh King & Grove label. The opening date: 2014.
Chetrit, sources told TRD, also plans to build at least one more King & Grove hotel in Brooklyn, though the exact location hasn’t been announced.
Second Development’s 95 Rockwell Place is set to be finished in 2015. The hotel should have about 200 rooms, event space, and 10,000 feet of restaurants and bars, including one on the roof.
Toll Brothers’ waterfront development at Brooklyn Bridge Park will have an approximately 200-room luxury hotel and 123 condos, as well as a 300-car garage, banquet hall, spa, gym, several restaurants and retail, the company said.
These higher-end projects herald a new era for hotel development for Brooklyn, sources said. Hospitality-industry insiders told The Real Deal they’re closely watching how these projects fare; success would be a sign that Brooklyn can hold its own in the hospitality sector.
Most developers, though, are still looking at projects under the Holiday Inn, Hampton Inn and Clarion brands, “which are historically the safe way to go,” said Hennessey. In fact, STR data shows an approximately 250-room Holiday Inn under construction at 300 Schermerhorn Street.
“But if you see success at BAM and Brooklyn Bridge Park, it will signify the arrival of an upscale customer base,” Hennessey said.
Locals and tourists
Brooklyn has Manhattan to thank in part for the surge in hotel development. In the last year, New York City as a whole has added about 12,000 rooms, Hennessey said.
But the borough also can attribute part of the demand to its own residents, especially its newly affluent ones, who need nice places for visiting friends and families to stay, said Tom McConnell, head of the global hospitality group at Cushman & Wakefield.
Indeed, McConnell thinks the demand from the locals far outstrips the demand from tourists priced out of Manhattan.
“The majority of the demand at these [new hotel projects] is Brooklyn-generated,” he said.
The occupancy rate for Brooklyn hotels is healthy and steady — hovering around 80 percent this year and last, compared with 61.4 percent nationwide. The average daily room rate is higher, too, and soaring: In April, the figure was $162.50, up 15.8 percent year over year, according to STR. The number for the country as a whole grew 3.5 percent, to $106.13.
Hotel developers are interested in Brooklyn because its land costs are still much lower than in Manhattan, sources said. Prices for development sites in Brooklyn now range up to $300 per square foot, compared with up to $1,000 in Manhattan, said Andrew Barrocas, CEO of commercial and residential brokerage MNS.
“Virtually every available piece of land [in Brooklyn] is being looked at for rentals, condos or a hotel,” said Ed Eschmann, a broker with CBRE’s evaluation group, who worked with Figueroa on his Williamsburg hotel project.
Still, industry sources underscore that the best-laid hotel plans may never pan out. As residential inventory plummets, land set aside for hotels may be swallowed up by the demand for housing — when zoning permits, McConnell said.
“The hotel pipeline is crimped because different uses might make more sense, and that’s usually residential,” he said.
Just because a hotel is planned does not mean it will be built, especially since residential is still considered a safer bet in Kings County. Figueroa’s project, for example, does not currently have financing.
In Brooklyn, McConnell said, it’s still “probably smarter to build residential than hotel.”