Ark Partners Launches 250-Key Luxury Hotel in Midtown Manhattan
- Sep 20, 2010
A ritzy new hotel is about to sprout up at 120 West 57th Street in Midtown Manhattan. Banking on the New York City hotel market’s anticipated return to happy days, New York City-based Ark Partners has just kicked off construction of what will be a 250-key, full-service property.
Ark has tapped Hunter Roberts Construction Group to serve as general contractor for the project, which will yield a 30-story structure built from the ground up between Sixth and Seventh avenues, just east of Carnegie Hall. The developer holds a 90-year ground lease on the site. In addition to upscale guest rooms, the 130,000-square-foot hotel will feature a high-end restaurant and bar.
“This project was negotiated in 2007 and closed in 2008 in anticipation of an economic crash and probable illiquidity in the debt markets, therefore suggesting to us a likely reduction of projected hotel supply for New York City,” Brad Reiss, chairman and CEO of Ark, noted in a prepared statement. “We are confident that our timing could not be better.”
Ark’s 57th Street hotel will make its debut in 2013, which, as many hotel developers are hoping, may well be a good time to open a new property in the market. “There are a number of hotels under construction in New York City today,” R. Mark Woodworth, president of Colliers PKF Hospitality Research, told CPE. “Why is construction picking up in New York City? New York City was the first market to get back to its long-run occupancy level. And because occupancies have recovered, managers can get more aggressive with pricing.” According to a new report by Marcus & Millichap Real Estate Investment Services, managers have become more assertive with pricing. In New York City, the average daily rate (ADR) climbed 15.4 percent from June 2009 to June 2010.
Nationally, the hotel market is entering recovery mode after an incredibly brutal 2009. “It was the worst year on record–ours go back to the 1930s–in terms of year-over-year performance,” Woodworth said. Citing Smith Travel Research, he added that on average, hotel revenue per available room (RevPAR) declined 16.8 percent in 2009 and the market experienced a 35.4 percent year-over-year decline in profitability.
“The previous record was 22.4 percent in 1938, so that tells you how extraordinary the situation is. But that’s all behind us. We saw a strong recovery in the national hotel market in the first half of the year and we anticipate that the turnaround will continue.” Coilliers PKF forecasts a RevPAR increase of 4.6 percent this year and even stronger growth through 2011 and 2012. “But we have a long way to go to get back to the previous peak level; that will start to happen in 2013 and for some, in 2014.”