Silverstein Properties, the developer of the World Trade Center complex in Lower Manhattan, is shifting gears to expand its presence in the city’s corporate apartment market. Silverstein Properties bought the Beekman Tower Hotel on Tuesday for $82 million with Fisher Brothers and Capstone Equities, and plans to convert the traditional transient hotel at 3 Mitchell Place — near 49th Street and First Avenue — into furnished, luxury corporate apartments that will require a minimum stay of 30 days. The company already offers 107 furnished corporate apartments that require a six-month minimum stay at its Silver Towers residential complex, on the south side of 42nd Street between 11th and 12th Avenues. In a similar vein, Silverstein Properties this month began renting 60 furnished, luxury short-term office suites occupying 33,000 square feet on the 46th floor of 7 World Trade Center. It is marketing its corporate apartment and short-term office suite businesses under a new Silver Suites brand. When completed, the Beekman Tower will be renamed Silver Suites Residences at Beekman Tower. The market for luxury corporate apartments in Manhattan is underserved and ready for expansion, according to Martin S. Burger, co-chief executive of Silverstein Properties. The existing Silver Suites Residences at Silver Towers have had a 97 percent occupancy rate since the beginning of 2011.

 Those apartments — studio and one- and two-bedrooms — range from about 400 to 1,100 square feet, and rent at a 30 to 40 percent premium above market-rate residential apartments in the complex. “Based on that experience and the occupancy we see, we’ve concluded there’s a real need for this product type in the city,” he said.

 Silver Suites’ prime competitors in the sector right now are AKA, which between 2005 and 2007 converted three condominium buildings and one hotel into luxury corporate apartments, and Oakwood Worldwide, which rents corporate apartments in 33 residential buildings that are described by STR, a lodging research company, as midscale.

 The extended-stay hotel brands of chains like Hyatt’s Hyatt Place, Marriott’s Residence Inn and IHG’s Staybridge Suites also have a presence in the borough. In addition, the five Affinia Hotels in Manhattan of Denihan Hospitality, which originally served only the extended-stay market, now cater to extended-stay and transient guests. (Extended-stay hotels tend to have shorter length-of-stay requirements than corporate apartments, which are usually in residential buildings.)

Although over 12 percent of demand for hotel rooms in Manhattan is for extended-stay lodging, only 3 percent of the borough’s supply of hotel rooms is in this category, said Bjorn Hanson, divisional dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University.

He also said the greatest undersupply in extended-stay housing is for what he called “upper upscale” accommodations, which have higher development costs and higher rates than those of Hyatt Place, Residence Inn, Extended Stay America and others. “Silver Suites is targeted at upper upscale demand,” Mr. Hanson said. According to STR, for the first 11 months of 2012, the average occupancy rate for the 12 extended stay hotels in Manhattan was 87.8 percent, up 3.6 percent compared with the same period in 2011, while the average daily rate charged by these hotels was $269.89, up 3.6 percent over the same period in 2011.

Jan Freitag, senior vice president of STR, called these statistics “indicators of a very healthy extended-stay industry in Manhattan,” and said it was “not surprising that real estate developers are targeting longer-term clientele that does not want to be locked into a long-term, annual lease.”

Source:nytimes.com

Subject: New York Corporate Housing