NEW YORK—Hotel developers are moving to take advantage of the evolution of the “new World Trade Center,” which will include five new skyscrapers to be completed in the next few years. A centerpiece of the development will be the world’s tallest Holiday Inn, a 50-story, 400-room, full-service property under construction at 99 Washington Street.
The Holiday Inn is a project of the McSam Hotel Group, a major developer in New York, and is expected to open in October of this year. According to a statement from IHG, the hotel “is in a great location at the intersection of Rector and Washington streets and in close proximity to all of the World Trade Center redevelopments. This area of New York City is coming back in a big way, and IHG is dedicated to our expansion in New York, one of the world’s most important hotel markets.”
Development surrounding the new WTC site includes the recently opened National September 11 Memorial & Museum; the World Trade Center Transportation Hub; 550,000 square feet of retail space; and the Performing Arts Center to be designed by Frank Gehry.
Another nearby project will be the conversion of a classic office building at 5 Beekman Street by Commune Hotels & Resorts, which will become a Thompson Hotel. That property is being developed by GB Lodging, an affiliate of GFI Capital, which owns the trendy Ace and NoMad hotels in New York. The landmarked building, which was built in 1883, will become a 297-room boutique hotel with 90 residences.
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| Construction is under way on the world’s tallest Holiday Inn—a 50-story, 400-room full-service hotel at 99 Washington Street with primary design by Gene Kaufman Architect. |
Also, a 176-room Fairfield Inn on Fletcher Street is scheduled to open in March 2014. The owner is Lam Generation, which currently owns a Fairfield Inn in midtown Manhattan.
Demolition has begun for a Four Points by Sheraton Financial District, another Lam project, to open in summer of 2013. In addition, according to the Downtown Alliance, an Aloft will be built on Ann Street.
Market demand
The reasons for all the activity—and discussion—is the potential for strong demand generated by the WTC and ancillary projects.
Demand generators for the Fairfield Inn on Fletcher Street include the surrounding office buildings, South Street Seaport and the WTC, said Tom Brinkman, senior VP of lodging development at Marriott International.
“The World Trade Center is expected to have a favorable impact on the overall demand for the entire downtown area, but the hotel’s proximity to the South Street Seaport will also play a key part in driving overall demand,” Brinkman said.
The seaport is not in the immediate vicinity of the trade center but is a fairly short distance away, as is much of downtown Manhattan. Brinkman said Marriott has other developments in the works in the area, but he was unable to provide additional information.
While the neighborhood around the WTC is part of downtown Manhattan, it has no specific boundaries. There is no question, however, that the pipeline for the broader area is a busy one. According to STR, parent company of HotelNewsNow.com, downtown Manhattan has 13 projects in construction with 2,273 rooms; 13 projects in final planning with 1,982 rooms; 32 projects in the planning stage with 3,066 rooms; and 19 projects in pre-planning with 1,947 rooms.
Researchers’ view
Another factor in the development, according to analysts, is the fact that the neighborhood is significantly different from when the original WTC opened in the 1970s.
“Tenancy in all those new buildings looks good, particularly in contrast to the original trade center,” said John Fox, senior VP at PKF Hospitality Research, a longtime observer of the New York hotel scene. “In the past, there were a lot of government offices in the buildings. Now the tenancy will be at a much higher level with private sector tenants like Condé Nast. That bodes well for a much more commercially oriented development.”
“With the development of the trade center adding so much office space, I’m not concerned about overbuilding,” Fox added. “In addition, there is a viable leisure market there as well. When the original towers opened, nobody stayed downtown because few people lived there, and there was nothing to do. Now there is a vibrant residential community and many restaurants and diversions, so people are willing to stay overnight.”
“The neighborhood is changing,” said Sean Hennessey, founder and CEO of Lodging Advisors. “The key element is Mayor Bloomberg’s goal of making downtown a 24-hour neighborhood and transportation center. It remains to be seen how things play out. Most people continue to perceive Midtown as offering more options for dining, entertainment and the arts. However, there are forecasts for 20 million people to visit the 9/11 memorial each year. The correlation of that kind of number and hotel demand is yet to be demonstrated.
“Also, there is a significant effort under way to redevelop the South Street Seaport and the surrounding streetscapes so it connects that area to the financial district with dining and entertainment components,” Hennessey continued. “That will also bring more life to the neighborhood.”
Gene Kaufman, lead architect on the Holiday Inn, said the hotel will play an integral role in the ongoing revitalization and recovery of lower Manhattan.
"Ten years after 9/11, with the Memorial recently opened and forecast to be the No. 1 tourist attraction in the entire nation, breaking ground in lower Manhattan … is clear evidence that this is a renaissance of the newest, biggest and best," Kaufman said in a statement.
