Stonebridge JV to Build $90M Hotel on Manhattan’s West Side
- Jun 26, 2008
A joint venture including Stonebridge Realty Advisors Inc. will erect a $90 million, 220-key select service hotel in Midtown Manhattan on W. 37th St. between 8th and 9th Avenues. The project is currently being contemplated as a boutique hotel or a primary select-service brand. The hotel will be strategically located near the redeveloping area around Penn Station, the Jacob Javits Convention Center, the West Side Rail Yards project, and is also within walking distance to Times Square. The project marks Stonebridge’s first venture into the Manhattan hospitality market; the company said it plans to partake in additional projects in the area and to grow its platform on a national basis. Stonebridge has already developed more than 60 hotels and currently operates 40 hotels comprising 6,000 guest rooms in Alaska, Arizona, California, Colorado, Florida, Nevada, Utah, Virginia and Washington. HREC Investment Advisors, the real estate brokerage and investment banking arm of Hospitality Real Estate Counselors, formulated the joint venture, which also includes West 37th Street Owner L.L.C. Debt and equity placements are nearing completion, which the investment firm said is a testament to the strength of the project and the development team in a difficult capital market. In 2007, the Manhattan hospitality market pushed its aggregate performance to records in occupancy, average rate and revenue per available room, further solidifying its position as the leading hotel market in the United States, according to a Manhattan hotel market overview report released by HVS Global Hospitality Services in late May. Occupancy rose to 85.9 percent, while the average rate climbed to $298.81, indicating that the city continued to operate at near-maximum capacity and experienced many sell-out nights, causing a significant amount of demand to remain unaccommodated. However, HVS noted that this unaccommodated demand will be fulfilled by a larger-than-even construction pipeline in Manhattan, even though the credit crunch may cause some proposed hotel development not to come to fruition. In other West Side news, the nearby West Side Rail Yards project received the green light from the Metropolitan Transportation Authority to move ahead on a $1 billion development deal between the Related Cos. and Goldman Sachs last month. The joint venture replaced Tishman Speyer, the original development winner, which dropped out after it tried to alter the terms of the initial development agreement and make its commitment conditional on rezoning. The new joint venture will develop a master-planned community above the two rail yards near the Hudson River.