Timing, Tenancy May Be Key for Proposed WTC Hotel
- May 14, 2009
With the recession suppressing the need for office space in New York City, planners at the World Trade Center site could be calling an audible. The Port Authority of New York and New Jersey is now looking at building a luxury hotel and residential building to replace one of the planned office towers. According to a report in the New York Post, the hotel and residential tower would be built at the site of the Deutsche Bank. The plan for that site was to sell it to JP Morgan Chase, which planned to build a new tower, complete with trading floors. Chase has now abandoned those plans. As for the hotel option, there is a fair amount of hospitality development planned for Lower Manhattan, according to John Fox (pictured), senior vice president of PKF Consulting. A new W Hotel is now under construction near the World Trade Center site, Fox said, that is scheduled to open next year. In addition, Four Seasons announced plans last year to build a hotel on Church Street, to include hotel rooms and condominiums, although Fox said construction has not yet begun. In the long term, a hotel is probably a good fit for the site, but its success will largely hinge on two factors, Fox said. One is the mix of tenants in the office buildings that will eventually populate the site. Fox noted that in the early years of the World Trade Center, the towers housed mostly government agencies, tenants that do not generate much hotel room demand. It was only later, when the Twin Towers and surrounding buildings housed more financial firms, that the area became more attractive to hotel developers. Timing is the other key component. “If the hotel was opening today, this wouldn’t be a good idea,” Fox said. But Fox said a luxury hotel would, at minimum, be ready to open its doors in four years, “and that’s pushing it.” New York City’s hotel market is now seeing both occupancy and room rate declines, with RevPAR down year-to-date about 31 percent, according to figures from Smith Travel Research. But PKF projects New York’s hotel market should start to rebound in late 2010 and 2011, Fox said.Robert Goodman, senior managing director of FirstService Williams, said he was “very excited” when he read about the proposal, because he believes having a hotel/residential component at the site will attract office tenants. “It’s very critical that a lively, dynamic work environment be created, and a hotel and residential component will accomplish that,” Goodman said. He noted that having a hotel and residential piece at the site will be attractive to media and advertising firms, and will attract more restaurants and cultural venues to the area. Attracting new types of tenants to Lower Manhattan will be critical, Goodman said, due to the shrinking head count at many financial services firms. “It’s a great coup, if it happens,” he said.