Wall Street Firms Are Moving West. Here Come the Luxury Hotels
(Bloomberg) -- Blue-chip office tenants are migrating to Manhattan’s far west side. It’s only a matter of time before the luxury hotels follow.
Brookfield Property Partners LP has signed up Pendry Hotels, a boutique brand owned by Montage International, to manage a 164-room hotel at Manhattan West, the developer’s 7 million-square-foot project adjacent to Related Cos.’ Hudson Yards. By the time the hotel opens in 2021, it will be surrounded by illustrious office tenants including KKR & Co., Wells Fargo & Co., EY and Amazon.com Inc.
“We’re trying to create a mixed-use place with a lot of energy, vibrancy, all with one specific goal -- to create an environment that helps our commercial occupants attract, retain and motivate their employees,” Brookfield Chairman Ric Clark said in an interview. “People who come to visit them need a place to stay.”
New York’s hotel market has seen plenty of construction in recent years, with the introduction of new supply weighing on growth. Revenue per available room decreased in each of the last three years, though it’s projected to increase this year, according to CBRE Group Inc. Much of the recent construction in the Midtown South submarket, which includes Manhattan West and Hudson Yards, is geared to middle-market travelers spilling over from Times Square.
“The hospitality stock is really made for average consumers,” said Bradley Burwell, a vice president of hotel brokerage and investment sales at CBRE. The parade of high-end corporate tenants helps developers “justify higher-end hotels opening up.”
Few properties on the far west side offer the level of luxury that Pendry aspires to. The brand’s first two hotels, in San Diego’s Gaslamp Quarter and Baltimore’s Inner Harbor, promise guests classic luxury service in a hip setting. The New York hotel, to feature a rippled facade by architecture firm Skidmore, Owings & Merrill LLP and interiors by Gachot Studios, will be the type of “service-forward, design-forward hotel you’d find in lower Manhattan,” said Pendry Hotels Creative Director Michael Fuerstman.
Fuerstman hopes that vision helps the hotel stand out from other boutique properties cropping up nearby, including Kimpton Hotel & Restaurant Group LLC’s Ink48, the High Line Hotel and Pestana CR7, a forthcoming property co-branded with soccer star Cristiano Ronaldo. Even closer to home, Related is building an Equinox Hotel at Hudson Yards in a bet that the popular health-club brand can attract high-end hotel guests. In addition to the nascent corporate hub, the hotels stand to benefit from new retail and cultural projects slated to open in the area.
“Luxury hotels tend to follow where our guests go,” Fuerstman said. “Now there’s essentially a neighborhood of premium shopping and restaurants and great retail and experience-driven stuff. I think we’re on the front wave of what will be some more development.”
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