HOTELS + TOURISM

Tourism Continues to Rebound

Lower Manhattan welcomed 7.4 million tourists in 2022 as domestic travel returned and most remaining international travel restrictions were lifted. Though still far below 2019’s 14 million tourists, 2022’s tourism number was more than double the visitation seen in 2020. The share of international visitors nearly doubled to 55% from 28% in 2021. Following Latin America’s lead in 2021, the bulk of international traveler origination shifted back to traditional western European markets in 2022. Asian tourism continues to lag behind its 2019 levels.

56.7 million visitors came to New York City in 2022, or 85% of 2019 visitation levels, and more than double the 22.3 million in 2020. Looking forward, international travel is expected to steadily increase, and New York City Tourism + Conventions forecasts that domestic travel will exceed prepandemic levels later in 2023.

Occupancy and Average Daily Room Rate Continue Recovery

Citywide hotel occupancy metrics are beginning to approach pre-pandemic levels, and occupancy rebounded sharply from the previous quarter across Manhattan hotel markets. Citywide occupancy levels rose by 11% over the previous year and Lower Manhattan recorded levels 6% higher than in the second quarter of 2022.

At $175 per night, citywide average daily room rates remained 35% below 2019 levels, but grew 9% year-overyear. Meanwhile, Lower Manhattan saw average daily room rates rise 14% higher than in spring 2019 and 7% higher year-over-year at $305 per night, likely spurred by the recent addition of new luxury properties to the neighborhood’s hotel inventory.

$305

Lower Manhattan Hotel Average Daily Room Rate

Hotel Occupancy in Lower Manhattan and New York City

Source: CoStar/STR

Hotel Average Daily Room Rate (ADR) in Lower Manhattan and New York City

Source: CoStar/STR

Lower Manhattan Hotel Development

The current hotel inventory in Lower Manhattan stands at 9,087 rooms across 43 hotels. No new hotels opened in the second quarter.

There are over 940 hotel rooms across five hotels under construction or in development in Lower Manhattan. One new hotel containing 70 rooms is expected to open later in 2023:

• The Warren Street Hotel, a new boutique hotel operated by Firmdale Hotels, is expected to open later this year at 86 Warren Street.

Inventory and Development

Lower Manhattan has 34,243 units in 345 residential buildings. There are 5,776 units in 18 buildings under construction or planned for development, with about 87% currently planned as rental units and 22% as condos. In early 2023, construction wrapped one property:

• One Wall Street: Macklowe Properties finalized construction on Macklowe Properties finalized construction on converting the landmarked office tower into 566 condominiums. The building offers 157,000 sq. ft. of retail, including a 44,000-sq.-ft. Whole Foods, 74,000-sq.-ft. Lifetime Fitness and Printemps, a luxury French department store, which spans 54,365 sq. ft. over two levels. Printemps is expected to open in spring 2024.

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. 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.

Finally, in June the New York State Supreme Court issued a ruling allowing development work to continue on Howard Hughes’ 399-unit rental building at 250 Water Street following an injunction issued by a lower court in January. An expected completion date has not yet been announced.

Residential Rental Prices Rise

According to residential statistics published by Miller Samuel/Douglas Elliman, the median rent in Lower Manhattan rose by nearly 7% over the previous quarter to $4,500 after cooling slightly at the beginning of the year. Median rents are now nearly 13% higher than before the pandemic, and listing discounts were largely absent in the second quarter as demand spiked during the busy summer leasing season. Available units were leased on average 14 days faster than in the previous quarter, suggesting that rents may continue to rise amid high demand and tight supply.

Median Residential Rental Price

Source: Miller Samuel/Douglas Elliman

130 Liberty Street

Manhattan’s overall median rent also rose to a new record high of $4,300. Manhattan overall median rents were 2% higher than in the previous quarter and nearly 23% higher than pre-pandemic. Manhattan’s overall median rent has now surpassed pre-pandemic rates for six consecutive quarters. Demand and prices appear poised to increase further amid an ongoing supply shortage and competition from would-be homebuyers who have remained in the rental market due to increased interest rates.

The sales market also heated up in the second quarter in Lower Manhattan as median sales prices rebounded after dipping at the beginning of the year. The median sales price for co-ops and condos in Lower Manhattan rose to $1.275 million, up nearly 7% from the first quarter, though 10% lower year-over-year and nearly 39% below the record high seen at the end of 2022. With 121 units sold, sales volume in Lower Manhattan nearly doubled over the previous quarter, driven by sales at One Wall Street and 130 William Street, and finished 6% higher year-over-year.

Across Manhattan median sales prices also rose from the beginning of the year, increasing 11.6% over the quarter to $1.2 million. Sales volumes rose by a modest 3.7% over the quarter, but finished over 39% lower year-over-year as tight inventory and increased rates have limited new transactions.

$4,500

Median Rent in Lower Manhattan — 13% Higher Than Before The Pandemic.

Median Residential Sales Price

Source: Miller Samuel/Douglas Elliman