Hotel builders, brands say ‘yes’ to Manhattan’s NoMad
 
Hotel builders, brands say ‘yes’ to Manhattan’s NoMad
19 SEPTEMBER 2018 7:49 AM

Growing technology and fashion industry demand has spurred big brands to follow independent hoteliers into this buzzing New York district.

NEW YORK—When longtime New York-based developer GFI Capital Resources Group reached out to local family-run hotelier Denihan Hospitality Group a few years back about possibly bringing that company’s James brand to Manhattan’s NoMad district, Patrick Denihan said it was an offer he couldn’t refuse.

“We knew that the office market in that area was hot four years ago, and it’s even hotter today,” said Denihan, co-CEO of the company. “It’s an exciting area of New York City.”

Fueled by an influx of commercial activity ranging from technology to cosmetics to fashion, NoMad, or “North of Madison Square Park,” continues to experience a stunning amount of redevelopment and rebranding activity among hotel builders and operators.

With properties such as the nine-year-old Ace Hotel New York, eight-year-old Royalton Park Avenue (formerly the Gansevoort Park Avenue) and six-year-old NoMad Hotel representing some of the area’s pioneers among upscale lifestyle and boutique hotels, both buyouts and rebranding activity have accelerated within the past three years.

Nowhere is that clearer than along a two-block stretch of East 29th Street between Park and Fifth Avenues.

In late 2015, Los Angeles-based CIM Group bought the former Martha Washington Hotel and the following year rebranded the 259-room hotel under SBE’s Redbury brand, marking SBE’s first entrée to the city (SBE subsequently acquired Morgan Hotels Group, whose New York properties included the Mondrian Park Avenue and Hudson, and is under contract to sell 50% of the company to AccorHotels). With the Danny Meyer eatery Marta on its ground floor, the hotel upgraded its lobby and guestrooms while adding a morning café and an evening wine bar—both also run by Meyer—on the north side of the ground floor.

SBE, whose lifestyle-hotel brands include SLS and Mondrian, made its New York debut in 2016 when the former Martha Washington Hotel was rebranded the Redbury New York. (Photo: Redbury New York)

Meanwhile, a block west, GFI, which developed both the Ace and NoMad (though has since sold its stake in the NoMad), partnered with Denihan and Rockwood Capital to acquire what was then the Carlton Hotel in 2016. The group officially relaunched the 355-room hotel as the James New York - NoMad earlier this year after a $55-million renovation, and the hotel generated additional buzz with the addition of the relocated Italian restaurant Scarpetta as well as a new cocktail lounge called The Seville.

Finally, across the street from the Redbury, the Gansevoort Park Avenue was acquired late last year by Green Oak Real Estate and Highgate. With Highgate having been part of the group that acquired midtown’s Royalton New York last year, the new Gansevoort Park Avenue owners reflagged the 249-room property as the Royalton Park Avenue.

Old buildings, new blood
Mark VanStekelenburg, New York-based managing director at CBRE Hotels, said the combination of an inventory of older, outdated hotels and office buildings with the influx of technology and entertainment companies has attracted more hotel developers and operators to the area, which lies just south of Manhattan’s Garment District.

“NoMad’s brimming up to be similar to what West Hollywood and Hollywood are in Los Angeles,” VanStekelenburg said. “It’s allowing some of those hotels that have existed for a long time there to get a second life.”

NoMad’s activity also reflects the confidence both developers and hotel operators have in a New York market where demand continues to outpace supply. Citywide demand from other parts of the U.S. is buffeted by what STR SVP of Lodging Insights Jan Freitag termed “the four-legged stool” of consistent group and transient business from both the business and leisure sectors.

And with the dollar steadily weakening against the euro for all of last year and part of 2018 before strengthening slightly in recent months, international travel to the U.S., and specifically New York, continues to be attractive.

As a result, through the first six months of the year, New York’s revenue per available room rose 5.3%, tracking ahead of the 3.8% overall U.S. average. Average nightly room rates exceeded $241 while occupancy advanced to 85%, both figures the highest among the largest 25 U.S. metropolitan markets.

“New York City goes in such waves,” Freitag said. “The first six months of the year have been on fire.”

Following the crowd
Such new hotel operators have more company, however. New York developers continue to open new hotels at a healthy clip, and room inventory as of June was 3.7% higher than a year earlier. Additionally, there are 13,000 rooms under construction, which account for about 11% of the city’s current supply. Only Nashville, among U.S cities, has a higher pipeline-to-supply percentage.

“New York City is still in the stratosphere when it comes to rooms under construction,” Freitag said.

And some of that supply appears to be coming from hotel brand operators from outside of the city who have gotten the hint about NoMad. Catty-corner from the Ace on Broadway, Virgin Hotels is preparing its New York debut with a 500-room high-rise hotel that’s being developed by the Lam Group and is slated to open in 2020.

About a block away on the western border of NoMad, Marriott International’s Moxy Chelsea, which is being built by Lightstone, is slated to open its 349 rooms this fall.

Marriott International will debut its Moxy Chelsea on the western border of New York’s NoMad district in fall 2018. (Photo: Yabu Pushelberg)

And, most notably, Marriott announced late last month it reached an agreement with developer Flag Luxury Group for a 250-room Ritz-Carlton to be built at Broadway and 28th Street. The $500-million project, which will also include branded residences, is slated for completion in 2021.

“NoMad is home to a growing number of major technology companies as well as creative firms,” said Tim Grisius, global real estate officer at Marriott. “We believe it will become a significant destination for both loyal Ritz-Carlton guests and local residents for a range of purposes including stays, meals, meetings and drinks.”

Denihan, whose company runs the James SoHo as well as the Surrey, the Benjamin and three New York hotels under the Affinia Hotels & Suites brand, said he’s unconcerned about new hotel entrants to NoMad, largely because of the additional commercial-based business that’s complementing the leisure sector. To that end, he expects as much as 25% of business at the James NoMad to be group-based, adding that the hotel’s recent group clients included members of the fashion and cosmetics industries.

“It’s always good to have new competition, because it keeps us on our toes,” Denihan said. “(New York) had 60 million visitors during this past year. Even with the supply, the rate got affected, but occupancy was still in the upper 80s and low 90s, so we continue to absorb.”

Global view
Better still for the neighborhood is its recognition gained through travelers by the geographic expansion of district-identified brands like NoMad, which is expanding to cities such as Los Angeles and Las Vegas; and Ace, which in the past couple of years has added outlets in Chicago, New Orleans and Pittsburgh.

“It’s hard to measure it now, but the deployment of brands that either started or got their legs in the NoMad area are being brought outside of New York City,” VanStekelenburg said. “So the NoMad area continues to build awareness through the deployment of these brands in other markets.”

No Comments

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.