HOTEL + TOURISM

Tourism Begins to Rebound

Lower Manhattan welcomed 5.7 million tourists in 2021 as domestic travel began to resume and international travel restrictions eased.1 While still far below 2019’s 14 million visitors, 2021’s tourism number was nearly double the visitation seen in 2020. The share of international visitors steadily increased to 28% and rebounded further throughout 2022. Traditional western European markets and Canada have rebounded significantly in 2022 after travel restrictions were lifted in late 2021.

Nearly 33 million visitors came to New York City in 2021, less than half the record total for 2019, but still up from 22.3 million in 2020. Looking forward, NYC & Company forecasts that international travel will triple its 2021 volume in 2023 and domestic travel will exceed pre-pandemic levels in 2023. While updated figures for 2022 are still being determined and are expected to be released in late February 2023, the data will likely reflect ongoing improvements from the lows of 2020.

Hotel Inventory Continues to Grow

The current hotel inventory in Lower Manhattan stands at 8,886 rooms across 42 hotels. As of the end of 2022, Lower Manhattan hotels contained over 940 more rooms than at the beginning of the pandemic. Tourism and hotel performance rebounded strongly over 2022 as governments lifted the few remaining pandemic related travel restrictions. 2022 was the first year since the onset of the pandemic in which there were no hotel closures in Lower Manhattan. Of the ten hotels that closed since 2020, five have rebranded under new management, two have reopened and two have been converted to residential use. Only the 33-room Down Town Association at 60 Pine Street remains closed. Over 480 rooms across three hotel developments opened in 2022. They include:

• The Wall Street Hotel opened at 88 Wall Street with 180 rooms. The building recently completed conversion from an underutilized office property. The hotel also features La Marchande restaurant helmed by chef John Fraser, a rooftop bar and terrace called Tontine, and a private ballroom; and

• Hotel Indigo NYC Downtown - Wall Street opened at 120-122 Water Street. The 127-room hotel also includes an on-site restaurant and rooftop bar; and

• Hotel Indigo NYC Financial District opened at 50 Trinity Place. The 173-room hotel also features a restaurant and bar called Half Moon.

Two hotels containing a total of 485 rooms rebranded under new ownership last year:

• The former 232-room WhyHotel at 110 Wall Street rebranded as Placemakr Wall Street. The property was previously WeLive apartments; and

• Hyatt Centric Wall Street debuted at 75 Wall Street. The property was rebranded from the Andaz Hotel Wall Street, which closed during the height of the pandemic, after the Hakimian Organization sold the 253-room hotel to Blue Sky Hospitality for approximately $85 million in early 2022. The hotel is wrapping up a refresh akin to a rebrand, as well as a reopening of the hotel’s restaurants.

Finally, the 289-room Radisson Wall Street at 52 William Street, reopened in August after operating as a temporary homeless shelter.

Amid the recovering hospitality market, over 12,200 hotel rooms in 80 developments are planned across the city — including 1,411 rooms across seven hotels in Lower Manhattan. Three hotels containing nearly 540 total rooms are expected to open in 2023:

• The Fidi Hotel at 11 Stone Street, containing 143 rooms;

• Motel One at 133 Greenwich Street, 326 rooms (after a renovation and rebranding of the former Courtyard by Marriott Downtown Manhattan/WTC); and nother four hotels are in the early construction or planning stages, including:

• The Warren Street Hotel, a 70-room boutique hotel operated by Firmdale Hotels, at 86 Warren Street.

• The Ned, a London-based luxury hotel and private members’ club, plans to open a 174-room hotel in the former American Stock Exchange Building at 86 Trinity Place in 2024;

• The AC Hotel at 112 Liberty Street, containing 230 rooms;

• Tempo by Hilton at 140-142 Fulton Street, containing 296 rooms; and

• The Moinian Group’s as-yet unnamed new hotel at 7 Platt Street.

Occupancy and Average Daily Room Rate Improve

Though citywide and Lower Manhattan hotel occupancy rates remain below pre-pandemic levels, positive momentum continued over the past year. The year began with depressed booking levels due to the spread of the Omicron variant, but travel and bookings rebounded strongly in the spring as most remaining travel restrictions were lifted and both business and leisure travel began to return. Hotel occupancy rates hit 79% in the fourth quarter, the highest quarterly occupancy since the end of 2019, although still 9% below pre-pandemic levels. Citywide occupancy was roughly on par with Lower Manhattan in the fourth quarter, spurred by major city events and the holiday season. Lower Manhattan’s average daily room rates grew to $324 in the fourth quarter, 15% above 2019 levels. Lower Manhattan room rates have increased with the addition of new high-end hotels opening over the past year.

Lower Manhattan Hotel Pipeline

8,886

Hotel Rooms in 42 Hotels With Another 1,411 Rooms Across 7 Hotels Planned

Inventory And Development

Lower Manhattan has 34,243 units in 343 residential buildings. Nearly 5,680 units in 22 buildings are under construction or planned for development, with about 56% currently planned as rental units and 44% as condos. Two residential buildings containing 775 units opened during 2022:

• One Wall Street: Macklowe Properties is finalizing construction on the conversion of the landmarked office tower into 566 condominiums. The building contains 157,000 sq. ft. of retail, including a 44,000 q. ft.. Whole Foods and 74,000 sq. ft.. Lifetime Fitness. Printemps, a luxury French department store, announced that it will open its first US location at One Wall Street in spring 2024. The store will span 54,365 square feet over two levels, including the landmarked Red Room; and

• 7 Dey Street: developed by SL Green, the 31-story, 209 rental unit tower includes 63 affordable units and 48,000 sq. ft. of retail and commercial office space.

Later in 2023, one additional residential development is expected to wrap construction and open, bringing another 58 units onto the market:

• 1 Park Row: developed by Circle F Capital, the 100,000 sq. ft.. development at the corner of Park Row and Ann Street will yield a new 23-story, 58-unit condo tower and feature 13,500 sq. ft. of retail space. This is the last parcel along Park Row left for development after J&R Music and Computer World’s closure in 2014.

Over the next several years, three new developments containing nearly 1,240 new units are expected to finish construction, including:

• 7 Platt Street: Moinian Group is currently building a new 250-unit tower that will also contain a hotel component. 7 Platt Street is expected to finish construction and open in 2025;

• 8 Carlisle Street: North Carolina-based developer Grubb Properties plans to build a 50-story building containing 22,000 sq. ft. of ground-floor retail and 400 residential units. 8 Carlisle, which is set to receive tax abatements under the recently expired 421a program, will include a mix of affordable and market-rate rental units. 8 Carlisle is expected to finish construction in 2025; and

• 160 Water Street: Vanbarton Group is currently working to convert the 24 story, 482,000 sq. ft. office building into a 586-unit market rate rental building. Construction is scheduled for completion by late 2025.

Two long-planned projects cleared significant regulatory and approval hurdles in 2022, though construction timelines for these projects remain unclear amid legal and funding challenges:

• 250 Water Street: in late 2021, the Howard Hughes Corporation received approvals to begin construction on its $850 million development project. The site will transform a parking lot into a 324-foot-tall building with 270 apartments (including 70 affordable units), Class A office space, retail and community space. The project will generate $50 million in funding for the South Street Seaport Museum, with $40 million generated from the Howard Hughes project and another $10 million committed by the City. The project broke ground in 2022, beginning with comprehensive remediation of the site through the New York State Brownfield Cleanup Program. In January a state Supreme Court judge issued an injunction on the project, challenging the Landmarks Preservation Commission’s decision to approve the development. The future of the project remains subject to ongoing litigation.

• 130 Liberty Street (Site 5): a partnership between Brookfield and Silverstein Properties received approval from the Port Authority and Lower Manhattan Development Corporation to develop Site 5 at the World Trade Center. The site was originally home to the Deutsche Bank building that was damaged on 9/11 and demolished in 2007; it currently serves as a Port Authority police depot and temporary plaza. The proposed 1.56 million sq. ft.. tower is estimated to have over 1,300 rental apartments, of which approximately 25% will be affordable. Plans are still not finalized, but construction hopes to commence later in the year.

5,776

Units In 17 Residential Buildings Under Construction Or In Development

Residential Rents Set Record Highs

According to residential statistics published by Miller Samuel/Douglas Elliman, the median rent in Lower Manhattan reached new record highs in three of the four quarters in 2022. The year began with a then-record high of $4,400, but dipped to $4,000 in the summer, reaching parity with overall Manhattan rents for the first time since the onset of the pandemic. Rents spiked again in the fall, reaching $4,500, and the year ended with rents climbing even higher to $4,634. This is up 3% from the third quarter and up 10% from 2021 levels. Median rents are now 16% higher than they were in late 2019. Rental prices in the neighborhood have spiked amid limited supply, a lack of concessions and high demand, including from would-be homebuyers pushed back into the rental market by increasing interest rates. Manhattan’s overall median rent fell 2.4% from the previous quarter to $4,000, declining for the first time since the first quarter of 2021 and indicating that borough-wide rents may have hit a peak at $4,100 in the fall. Nonetheless, Manhattan-wide rents remain 14% higher than at the end of 2019.

Residential Sales Volume Falls Amid Rising Interest Rates

Inflation reached the highest levels in decades in 2022, prompting the Federal Reserve to raise interest rates. High inflation and increased borrowing costs led to a significant decline in the number of sales recorded in Lower Manhattan in 2022. 350 units were sold in 2022 — 33% fewer than the 520 sold in 2021, though still 29% more than the number sold in 2019. Buyers have continued to prioritize additional space, and the distribution of units sold by size has reflected this trend over the past year. Compared to 2021, the share of two-bedroom units sold increased by 7% and the share of three-bedroom units increased by 9%, while the share of studio and one-bedroom units sold fell by 9%.

The median sales price for Lower Manhattan co-ops and condos rose to a record high of $2,075,000. Median prices surpassed $2 million for the first time since the third quarter of 2020. Prices surged at the end of the year, driven largely by sales at the newly-delivered 130 William Street and 77 Greenwich Street. Lower Manhattan ended 2022 with median sales prices nearly double the Manhattan-wide price of $1.1 million.

Lower Manhattan Median Residential Rent, Q1 2017 - Q4 2022

Source: Miller Samuel/Douglas Elliman

Lower Manhattan median rents set three record highs in 2022 and are now 16% higher than they were in late 2019

Lower Manhattan Median Condo Sales Price, Q1 2017 - Q4 2022

Source: Miller Samuel/Douglas Elliman

Lower Manhattan median sales prices rose to a record high of $2,075,000

Sales Volume of Lower Manhattan Condos/Co-Ops, Q1 2016 - Q4 2022

Source: Miller Samuel/Douglas Elliman

350 units were sold in 2022 — 33% fewer than in 2021.