|By Prashant Gopal, The Record, Hackensack, N.J.|
Knight Ridder/Tribune Business News
Jun. 23, 2005 - Condo towers featuring hotel-like comforts are all the rage these days. So it's no surprise that hotel developers have taken the concept to the next level, offering for-sale units in their luxury hotels.
In North Jersey, the W Hotel plans to build a 25-story waterfront tower in Hoboken that will have 225 guest rooms topped with 40 condos.
Residents and guests will share the hotel's health club, concierge, spa and other amenities. And residents will be able to order housekeeping, linen service and room service, all for a fee of course.
"For years now, condo developers and apartment developers have been pushing a resort lifestyle," said David Barry, president of Applied Development Co., which expects to complete the W Hotel in Hoboken in 2007. "Instead of saying it's like living in a hotel, you can now say you are living in a hotel."
About 10 miles up the Hudson River, developer Town & Country plans to include a hotel-condo project as part of a large mixed-use community in Fort Lee. The hotel, which does not yet have a brand name, will have 242 guest rooms and 63 condos, said Paul Kaufman, an attorney who represents Town & Country.
"From the developers' point of view, where there's demand, the goal is to provide the supply," said Kaufman.
Until recently, most of the hybrid hotels were in tourist destinations such as Hawaii. Then they began spreading to urban centers such as New York, Miami, Chicago, Boston, San Francisco and Toronto.
"While this has been around for a while, there still isn't an established market," said Jeff Higley, editor in chief of Hotel & Motel Management in Ohio. "What people in the hotel industry say is that unless there's a resale market established, you don't know what the market is going to be. The current flurry is mostly in the planning or construction stages."
In 2002, Ritz-Carlton opened two Manhattan hotel-condo buildings. The units range from $600,000 to $5 million at the Battery Park location. One unit at the hotel's Central Park South building sold for $21 million, said Matthew Hall, a spokesman for Millennium Partners, which developed the condos.
Many Ritz dwellers split their time among several residences and depend on the staff to watch over the property while they're away, Hall said. And when they're in the city, "people really love the convenience of living in a hotel. Also, it's nice to say you live at the Ritz."
Elsewhere in Manhattan, the 18-month-old Mandarin Oriental hotel in the Time Warner Center has 65 residences.
And The Plaza and the century-old St. Regis are both converting some guest rooms to condos.
There are many reasons behind the trend. For one thing, condo-hotels are efficient. Guests and residents share amenities, common spaces and employees. And most hotels will rent out condo units for the owners when they are out of town, with the receipts being divided.
Another reason that condos are being included in so many new hotels is that start-up costs take years to recoup. The condos bring in cash immediately.
"The hotel market is the hottest market in real estate," Higley said. "What you're seeing is a natural meeting between two industries that are hot."
Low interest rates are also a factor, as are demographic trends, with many baby boomers approaching retirement and looking for either a second home or a low-maintenance alternative to a single family home.
What most of the hybrid projects have in common is a hotel brand with cachet. The projects only work when people live above a hotel with high-end standards, said Sean Hennessey, CEO of Lodging Investment Advisors, a hotel consultant company.
"A lot of homebuyers will pay a premium to live in a place that embodies a certain lifestyle," Hennessey said. "The hip people like W hotels and will pay more per square foot in a W Hotel building with that image than they would for just Sean's Apartment Building."
The developers of the W Hotel haven't set a price for the condos. But the prices will likely start at about $1 million, said Michael Barry, president of Applied Property Co. Unlike some of the New York condo-hotels, Barry said he expects the Hoboken W Hotel to attract full-time residents.
"I think it will have more of an appeal to the young Wall Street executive or the family that wants to stay in Hoboken and have this as fantastic primary residence," Barry said.
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Copyright (c) 2005, The Record, Hackensack, N.J.
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