New York is a hotel town. Glamorous haunts like the Plaza and the Carlyle are etched into the city’s lore, while boutique newcomers—the Mercers, Maritimes, and Grands—have transformed its social life. The newest category to make its mark is not doing so through cachet, however. More likely to overlook scrapyards and warehouses than Broadway theaters and four-star restaurants, these hotels are the strange progeny of a boom economy and an anomaly in the zoning code. They are, to coin a phrase, the industrial hotels.
“Here’s what you’re looking at—Manhattan Mini-Storage on one side, the Holland Tunnel on the other, and a waste transfer station over there,” said Sean Sweeney, director of the Soho Alliance, expressing his dismay over the most famous such hotel, the Trump Soho, now nearing completion at 246 Spring Street.
Trump and his partners at the Bayrock/Sapir Organization could just as easily have built to the east of 6th Avenue in Soho proper. But then they would not have been able to create what at 44 stories will be the tallest building between 34th Street and the World Trade Center when it opens this fall. The area, known as Hudson Square, is zoned for high-density light manufacturing, and is full of the mid-rise loft buildings that were once at the heart of the city’s printing industry. But like manufacturing districts citywide, it allows developments such as Trump’s, thanks to a quirk in the 1961 Zoning Resolution that permits hotel construction as of right.
Both industrial buildings and hotels require high-density sites, though for precisely opposite reasons. A manufacturer typically builds out to the edge of the lot to get wide-open floors conducive to machinery and storage. An hotelier, on the other hand, is more likely to choose a taller building with a narrow floor plate so that each room has a window. Any given warehouse and hotel may have identical floor area ratios, but their form and the kinds of jobs they provide could not be further apart.
But beyond the physical advantages of developing hotels in manufacturing districts, there is also substantial demand. According to NYC & Co., the city’s tourism arm, lodgings in the five boroughs averaged an 86 percent occupancy rate since 2004, while the average room rate rose from $210 to $312. And as the city continues to rezone industrial areas like Dutch Kills in Queens, which saw more than a dozen hotels built within an eight-block area in three years, it’s best to get in while land is still cheap.
“We’ve been losing manufacturing at an alarming rate,” said Eve Baron, director of the Planning Center at the Municipal Art Society (MAS). In 2001, she completed an inventory of the city’s manufacturing zones with the New York Industrial Retention Network (NYIRN) and the Pratt Center for Community Development. While the resulting study found a number of development pressures threatening industrial areas, Barron said that hotels never came up. But now they are a serious issue, she argues, because unlike big-box retailers or illegal conversions, hotels tend to be physically out of scale with the buildings in manufacturing areas: “It changes the character of a neighborhood.”
Look no further than Hotel Le Bleu. Opened in November 2007 during the peak of the hotel boom, it briefly charged more than $300 a night, despite being within a block of the famously polluted Gowanus Canal. And yet it’s the first of eight hotels going up nearby. Like its Williamsburg sister Hotel Le Jolie, which charges similar rates for views of the Brooklyn-Queens Expressway, Le Bleu’s style is more Best Western than Biltmore. Still, next to its low-slung neighbors, the eight-story Le Bleu has unrivaled views, albeit of the canal, but also of Manhattan off in the distance.
Despite cries from manufacturers and groups like MAS and NYIRN, the city sees no problem. “Transient hotels are compatible with commercial and light industrial businesses, and important to the overall economic health of the city,” said Jennifer Torres, spokesperson for the Department of City Planning. “Hotels need to be able to locate where business is conducted, as well as where they can serve demand generated by nearby residential neighborhoods.”
Adam Friedman, director of NYIRN, did acknowledge the Bloomberg administration’s work on industrial retention with the creation in 2005 of Industrial Business Zones (IBZ) that provide protections to companies located therein. But they do not preclude hotels. Friedman points to one NYIRN study that found that of the 23 hotels built in manufacturing districts in the last five years, 12 were built in IBZs.
He would like to see the creation of Industrial Employment Centers, which would require any non-manufacturing use to go through environmental review and approval by the City Planning Commission and the City Council. The council voted in support of such a measure in 2006, but has taken no action since.
Some might argue that with the recession in full swing, the market will move away from such development. According to NYC & Co.’s numbers, occupancy since October has fallen an average of eight percent despite a record-breaking August, when it was at 92.4 percent.
But according to numbers from hotel consultancy PKF, the city has enjoyed 80-plus percent occupancy rates since the late 1970s, meaning the recent boom in hotels is not a fad but the new reality, at least once the city climbs back out of the current recession. In essence, it is the entire city that is encroaching on its few remaining manufacturing zones, and the hotels were just first to get there.
“Of course they’ll be back,” Friedman admitted. “Within a year or two, the market will be strong again, and the underlying issues will still be there—how do you have a manufacturing district like Long Island City so close to somewhere like Midtown Manhattan?”
