To purchase a development site (often times an empty lot), the cost per buildable square foot (how much you are permitted to build on that site) averaged in $681.00 in 2016 (TRD 7/17). Most of that amount would be for the air above the soil....only in New York!
The Hotel Business
The price of hotel rooms has declined by 30 - 50 % in the past two years, and so finally the price to purchase hotels has come down as a result, which was needed. The Viceroy on West 57th Street sold in 2018 for $41 million, having traded for 148.5 million in 2013, making the current price per room a reasonable $170,000 (NYP, 1-/15/18).
New York City had 58.3 million visitors in 2017 but only has 115,369 hotel rooms....with average room rates being $273.00 (RD 2017 DB). A recent hotel development site at 145 West 47th Street sold for $713 a buildable square foot (4/17). A recent and smart hotel deal would be Sam Chang's 140 West 28th Street, which went for $230,000 a key (CO 1/10/18). Hotel properties, which recently were selling at record prices ($2.04 million per key at the Baccarat, $1.4 million per key for the Mandarin Oriental hotel in the Time Warner Center ), should keep going down in price. The average price per key in 2016 was a crazy $500,9078. In December of 2016, the 618 room Stewart Hotel sold for $351,132 a room (CO 1/4/17). The Elysee, a four star property on East 54th Street off of Park Avenue, traded for $55 million, or $550,000 per room, in the winter of 2016 (REW 2/10/16). The most recent big sale was the Waldorf, in October of 2014, which traded for $1.9 billion, or $1.4 million per room...with every one of them needing major renovation.
No owner is going to make any money from most of these deals in the months and years to come. The Hilton Garden Inn in Chelsea traded in the summer of 2016 for $405,000 per room (REW 7/20/16). The 2015 sale of the Palace Hotel was for $885,588. per room...and the 563 key London Hotel sold for $382 million shortly thereafter, or $678,000 per room. In October 2012, the sale of the 665 room Manhattan Hotel (formerly the Sheraton Manhattan), was for $275 million, or $413,533 a room. In August of 2012, the Essex House on Central Park South sold for $375 million, or $736,738 a key--in 2005 the same property had sold for $423 million, which means that a $48 million loss was taken. The 775 room Helmsley Hotel on 42nd Street sold in April of 2011 for $570 million, or $735,483 a key. The more modest Holiday Inn Express at 15 West 45th Street also sold in March of 2011, for $354,000 a key. The Royalton and Morgan Hotels traded for $496,453 a key.
In October 2012, the Setai Fifth Avenue was sold for $229 million, or $1.070 million per room--again, way too much. Finally, the Milford Plaza was reported in April 2013 to have sold for $325 million, or $250,000 per room, which is a hotel sale that should actually make some money for its new buyers. At the close of 2013, The Park Lane, which is arguably in the best hotel location in the city, sold for $660 million, or $1.090 per key (income was said to be $20 million a year there for the Helmsleys....so not a great return, but a better price than the over one billion dollars that the estate had wanted several years ago. The 300 room Standard, which traded in February , 2014 for $400 million, or $1.333 million per room...