Crashes in Tourism and Business Travel May Signal Trouble for Downtown Hotel Sector
Rendering of the 30-story hotel planned for 112 Liberty Street.
A hotel developer seeking to repeat a 2017 coup may face headwinds that could work against such a reprise. Last December, Hidrock Properties, a Manhattan-based builder of hotels and office properties, completed demolition of two small buildings at 110 and 112 Liberty Street, between Greenwich Street and Trinity Place, which it bought for $38 million in 2018. (Local residents may remember them as the home of the Ho-Yip and Essex World restaurants.)
Since then, there has been no visible activity at the site, even though several months passed between the end of work in tearing down the original structures and the onset of the “pause” order (triggered by the pandemic coronavirus) that brought most business activity throughout the City to a halt in March.
Hidrock was likely inspired to acquire the Liberty Street parcel by the frenetic pace of local tourism (some 14 million visitors came to Lower Manhattan in 2019, according to the Downtown Alliance) and its own recent experience in local hotel development.
In 2007, the firm paid $28 million for a site at 133 Greenwich Street, in the Financial District, where it built a Courtyard by Marriott Hotel. Just as this structure was completed, it sold the property to Union Investment Real Estate GmbH (the property arm of Germany’s DZ Bank Group), which paid Hidrock $206 million for the hotel.
But two tidal shifts in the market may augur ill for Hidrock’s plan. First, local travel and tourism have ground to a halt in the wake of the pandemic coronavirus. When the total number of visitors to Lower Manhattan in 2020 is tallied, it is likely to be a fraction of the headcount in recent years.
Second, by any reasonable yardstick, the hotel sector in Lower Manhattan has been drastically overbuilt — the result of nearly two decades of giddy speculation by developers, such a Hidrock.
In the years leading up to the terrorist attacks of September 11, 2001, visitors wishing to stay in Lower Manhattan had essentially three choices: the Marriott World Trade Center Hotel (destroyed when the Twin Towers collapsed), the Marriott World Financial Center Hotel (now known as the Marriott Downtown, on West Street), and the Millennium Hilton Downtown Hotel (on Church Street, opposite the World Trade Center complex).
Today, there are 37 hotels operating in the square mile below Chambers Street, offering more than 7,900 rooms, according to the 2019 Lower Manhattan Real Estate Year in Review, a report from the Downtown Alliance. The same analysis indicates that another 15 hotels, containing an additional 2,000 rooms, are currently under construction or in the planning stages. That represents more than one-fourth of the 56 hotels currently being built or planned in all of Manhattan.
Even before the national and local economies stalled, as a result of quarantine measures, the hotel business in Lower Manhattan had begun to show signs of impending trouble. The Ritz-Carlton Battery Park (at Two West Street) opened to much fanfare in 2002, but was never able to turn a profit. Sold to a new operator in 2018, its name was changed to the Wagner. (The current owner is hoping to exit the hotel business entirely, by seeking permission to convert the structure into apartments.)
More recently, the Andaz Hotel (at 75 Wall Street) was put up for sale by its owner, the Hakimian Organization. The building is being shopped to developers based not on its value as a hotel, but instead for its potential to convert into office or residential use.
But all of the harbingers came before every hotel in Lower Manhattan (and most throughout New York City) was shut down as part of the social distancing measures that aim to limit the spread of the coronavirus. In the weeks that followed, many local hotels were commandeered for other uses: the City began using the Radisson New York Wall Street Hotel (located at the corner of William and Pine Streets) to house homeless people quarantined because of possible exposure to the disease. And the Conrad Hotel in Battery Park City (located in Battery Park City, at 102 North End Avenue) was repurposed to house healthcare personnel who volunteered to come to New York and aid in the fight against the pandemic.
Even after the health crisis recedes, however, a significant (and prolonged) financial downturn is widely expected to follow. If this contraction jolts the hospitality industry as similar episodes have in decades past, at least some of the dozens of hotels recently built in Lower Manhattan may not reopen their doors. And other, currently under construction, may never welcome their first guests.
What might become of these structures remains unclear. It is possible (although expensive) to convert hotels into apartment buildings, but a twin glut of residential development is also cresting in Lower Manhattan at the same time. It appears likely, however, that such a transformation will alter the local streetscape in ways that are both significant and hard to predict.
But such a crisis may also create opportunity, for community leaders who have long bemoaned the critical shortage of affordable housing in Lower Manhattan. If even a significant fraction of the Downtown’s hotel inventory were to be adapted for residential use, this process would likely create a thousand or more new apartments. A campaign to enact incentives for developers to set aside at least some of these units as affordable dwellings could mitigate some of pricing pressure suffered by longtime residents in recent years.
In the meantime, however, Hidrock is pressing ahead with its plan. Newly released renderings of the project at 112 Liberty Street depict a 30-story hotel containing more than 200 rooms.
Community Board 1 Virtual Meetings This Week
The physical Manhattan Community Board 1 office is closed until further notice. Please use firstname.lastname@example.org as the principal means of communication with Community Board 1 staff who are working remotely to every extent possible. Live remote meetings are at https://live.mcb1.nyc and are open to all.
Monday June 1, 6PM
Working Venue Working Group
1) Potential Large Venue Impacts in the Bowling Green Area – Discussion
2) Development of Guidelines for Licensing & Permits Committee for Large Scale Venue Applicants – Discussion
Tuesday June 2, 6PM
Transportation & Street Activity Permits Committee
1) Bicycle Lanes – Updates & Possible Resolution
2) Open Streets in CB 1 – Updates & Possible Resolution
3) Street Seats and Social Distancing Space for Small Businesses – Discussion & Possible Resolution
4) Traffic-Related Issues for Large Venues – Discussion
5) Emergency Bus Lanes- Discussion & Resolution
Wednesday June 3, 6PM
Battery Park City Committee
1) BPCA Role with Open Streets – Discussion – Nicholas Sbordone, Vice President of Communications & Public Affairs, Battery Park City Authority
2) Reopening Public Facilities in BPCA Parks and Dog Runs – Discussion & Possible Resolution
3) Reopening Passive or Active Recreation Space of the BPC Ballfields – Discussion
4) BPCA Report – Nicholas Sbordone, Vice President of Communications & Public Affairs, Battery Park City Authority
5) BPC Security Update – Patrick Murphy, Director of Security, Allied Universal
A Quantum of Solace
Three More Lower Manhattan Residents Die from Pandemic, But Local Trend Lines Continue to be Favorable
The death toll among Lower Manhattan residents from the pandemic coronavirus has grown by three additional lost lives, to a total of 67. This represents a 4.6 percent increase from the Broadsheet’s last update, on May 22. Statistics released by the City’s Department of Health (DOH), which quantify mortality and infection metrics, indexed by zip code, continue to show that only two zip codes (among 178 residential districts) throughout the five boroughs have registered no deaths at all from COVID-19 (the disease caused by the pandemic coronavirus), and both are located Downtown: 10280 (southern Battery Park City) and 10006 (the Greenwich South neighborhood).
Council Member Pushes Back on Reopening Plans That Ban Public Transit
The New York Stock Exchange partially reopened on Tuesday, after a hiatus triggered on March 23 by the discovery that several employees were infected by the pandemic coronavirus. In a controversial decision aimed the mitigating the risk of further infections, the NYSE banned from its reopened headquarters staff members who travelled to the iconic Broad Street building via public transit — a policy that may become a model of other large offices, as they contemplate resuming normal operations.
Less Trash and Fewer People May Explain Why Downtown Avoided the Worst
Two statistical indicators are pointing toward a demographic shift that may help explain why Lower Manhattan has been largely spared the brunt of pandemic coronavirus, which has exacted a much heavier toll in other communities throughout the five boroughs of New York City.
The first of these is 2.89 million fewer pounds of household garbage being produced during the month of April, compared to the same period a year earlier. In an analysis researched and reported by The City (an online, independent, nonprofit news outlet), Community District 1 — a collection of neighborhoods encompassing 1.5 square miles, bounded roughly by Canal, Baxter, and Pearl Streets and the Brooklyn Bridge — produced 1,445 tons of household trash for pickup by the City’s Department of Sanitation in April. This amounted to a 28.6 percent drop from April 2019, when the same catchment area produced 2,025 tons.
Click here to view a list of Downtown restaurants compiled by the Downtown Alliance that are open and serving takeout and delivery.
Onetime Presidential Contender and Liberal Firebrand Endorses Lower Manhattan Candidates
Progressive icon and prospective vice-presidential candidate Elizabeth Warren waded into local politics on Wednesday when she endorsed two elected officials representing Lower Manhattan in their bids for reelection.
In the U.S. Congressional race for the Tenth District, she announced her support for Jerry Nadler, saying, “his record shows that he doesn’t just know how to fight, he knows how to win. I’m honored to call Jerry a friend and someone I continue to work with on important legislation.” As chairman of the House of Representatives’ Judiciary Committee, Mr. Nadler was one of the leaders of the effort to impeach president Donald Trump last fall.
State Launches Online Map Showing Local Testing Facilities
On Sunday afternoon, the State Department of Health launched on online map specifying the locations of more than 700 facilities throughout New York where testing for exposure to the pandemic coronavirus is available. These testing sites can process up to 40,000 patients per day, and are currently operating well below their capacity.