downtownexpress.com
Volume 19 | Issue 32 | December 22 - 28, 2006

Downtown Express photo by Skye H. McFarlane

The Duane Street Hotel as it looked last week. Some real estate blogs had posted images indicating the hotel was about to open.

Hotels bullish near Wall St.

By Skye H. McFarlane

Lower Manhattan’s construction surge is no longer limited to condos and commercial office space. Research from New York City’s official tourism agency shows that Downtown is in the midst of a major hotel-athon, with the neighborhoods south of Houston St. now second only to Midtown in new hotel developments.

The hotel boom as a whole is generally welcomed as a mark of the neighborhood’s economic resurgence. Yet like many of the area’s other building projects, both public and private, individual hotel sites have run into a cornucopia of snags — ranging from mundane construction delays to full-out verbal warfare with community groups.

According to research published by NYC & Company, 15 new hotels will open Downtown in the next three years, an up-tick that is second only to the 25 planned in Midtown Manhattan. That total does not include two establishments that opened in 2006 and a number of projects that are slated for 2010 or beyond. In all, more than 3,300 hotel rooms are in the Lower Manhattan pipeline, a number that would more than double Downtown’s capacity for visitors.

Overall, NYC & Company’s Kimberly Spell said in an email, the hotel development is a sign of a robust economy and a healthy tourism industry.

“Really there’s no room at the inn right now,” said Eric Deutsch, president of the Downtown Alliance, which manages Lower Manhattan’s Business Improvement District. According to the Alliance’s third quarter data, Downtown hotels are running at 86.5 percent occupancy. Deutsch said that more rooms are needed to accommodate the influx of business travelers that will result from millions of new square feet of office space, as well as the tourists who will come to visit the World Trade Center memorial.

“Now’s the time to add more rooms and add more services,” said Deutsch.

Deutsch said that by keeping tourists and business travelers — and their money — Downtown, the new hotels will be a boon for local restaurants and retailers. That boon, in turn, will aid the Alliance in its mission to attract more businesses to the neighborhood.

“It adds another population that will be spending,” said Deutsch. “You have the corporate working population that spends fairly consistently and a residential population that spends, but those people [travelers] really spend money. They’re here to enjoy themselves.”

While the hotel picture on paper looks rosy, a number of establishments have encountered, or caused, problems in the real world. A Hampton Inn at 320 Pearl St., within the South Street Seaport historic district, was delayed after its final design irked the Landmarks Preservation Commission (the actual building did not match up with pre-approved plans). A Hilton Garden Inn at 6 York St. has battled both construction delays and community resistance to its liquor license application, although Community Board 1 eventually advised the State Liquor Authority to approve the license. For unknown reasons, Robert DeNiro’s celebrity Downtown Hotel appears complete from the outside but is not yet open, and a Four Points Sheraton, which was scheduled to open on Charlton St. in July 2006, has barely begun construction. In the most bizarre and public snafu to date, Donald Trump’s planned condo-hotel on Varick and Spring Sts. has been endangered, first by Trump’s marketing of the building for residential use, illegal under the area’s zoning laws, and then by the discovery of historic human remains on the site. In this case, the delays have come as welcome news to community members who oppose the development for a third reason — its legal, but out-of-context, 45-story height.

One property that exemplifies both the promise and the pitfalls of the Downtown hotel boom is 130 Duane St., a 45-room boutique hotel at the corner of Church and Duane Sts. The site is owned by Hersha Hospitality, a firm that works with chains like Hilton and Marriott, and was developed by prolific hotelier Sam Chang, who has also been involved with 320 Pearl St., 6 York St. and six other Downtown sites. The Duane Street Hotel, on paper, is an ideal match for its location in trendy Tribeca, just north of the W.T.C. It will offer upscale, loft-like accommodations and cater to corporate travelers, charging an average rate of $350 per night.

However, the property has been under construction for six years and is not scheduled to open until the first week of March 2007, despite a skillfully Photoshopped rendering on the hotel’s Web site that caused several real estate blogs to prematurely herald its completion. Problems with contractors have led to costly delays and created a testy relationship with nearby residents, who say the site has caused flooding and rat infestations in neighboring buildings. The hotel has changed its name twice, from the Hotel Tribeca to the Loft Hotel N.Y. to the Duane Street Hotel and the developers have been slow in showing C.B. 1 their final plans, leading to more distrust in the community.

On Tuesday, citing the development’s checkered history as well as its proximity to a local nursery school and a large number of other alcohol-serving establishments, C.B. 1 overwhelmingly rejected Duane Street’s application for a liquor license in an advisory vote. General manager Jeffrey Stegman told the board that Duane Street’s restaurant, an upscale joint to be named “Beca,” will be crucial in attracting the best clientele. Still, community members feared that licensing a small hotel would set a bad precedent and add to smoke and noise problems in the area.

“It’s not really about the quality of Hersha; it’s about the quality of life on this site,” said C.B. 1 public member Jean Grillo. “The community needs a little peace and quiet on this corner.”

Stegman told Downtown Express that Duane Street would press forward with restaurant plans and make its case before the State Liquor Authority in January. No matter what happens, Stegman is enthusiastic that the hotel is finally close to opening. And despite Duane Street’s difficulties, Stegman remains bullish about both the Downtown hotel market and the neighborhood as a whole.

“It’s an intriguing area. Obviously, there was an unfortunate situation in 2001 that brought a lot of people back up to Midtown, but this is an area that’s now in its resurgence,” he said. “There’s only going to be more hotels coming in.”

Skye@DowntownExpress.com

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