Long Island City and Jamaica are developers’ first choices when it comes to building hotels
After Manhattan, the most popular neighborhood for new hotel development is, by far, Long Island City, in the borough of Queens. Data shows that since 2010, 45 new hotels have been developed or are in development in the area. Long Island City’s closest competitor is in the same borough: Jamaica, but the difference between them is huge. This second neighborhood only has 26 developments of this kind. The third spot was taken by Williamsburg and Sunset Park, with 14 projects each and they were followed by another Queens neighborhood, Flushing, with 12.
Nevertheless, the question remains: why is LIC so popular for hotels? It seems that it is because zoning flexibility and the short distance that separates this area with Manhattan. George Xu, the founder of Century Development Group, a real estate firm located in Queens said the area is particularly popular for those looking to build budget hotels, since the more luxurious establishments are still largely concentrated in Manhattan. The hotels that one can find int Long Island City cater to both business and leisure travelers, but the majority of the individuals that lodge there are looking for leisure.
To support Xu’s argument we have the largest hotel planned for LIC. This hotel is a branch of the economy hotel chain Tokyo Inn and will be addressed at 24-09 Jackson Avenue. Once it completes construction, it will have 1,260 keys. The company started its Queens project last fall, and this building will follow others hotels located in Japan, Cambodia and Korea.
Even though this particular establishment has international origins, many of the other LIC developments belong to local people. For example, JMH Development owns a project addressed at 36-20 Steinway Street that will have 289 rooms, and Brooklyn North Capital is working on a hotel addressed at 38-15 9th Street that will have 198 rooms.
In spite of the success of the last few years, Xu thinks the boom will eventually fizzle out, especially when taking into account the fact that the market is slowly but surely becoming oversaturated. This is why his company does not have projects of this kind in this neighborhood. Once this market reaches its limit, developers will start focusing on Brooklyn and other neighborhoods that, like LIC, are very close to Manhattan. For Xu, it is Williamsburg the area to watch for.
Even though Xu is worried, the hotel market in Long Island City is still going strong. Last October, studies registered an occupancy rate of 81%, which represents a growth from 2016 and 2015, were the numbers registered in the same period of time were 79.4% and 78.2%, respectively. Furthermore, the revenue per room has been growing non stop since 2014: this year the average per night is $120.30. Nevertheless, Jamaica had better numbers than Long Island City. The occupancy rate was 95.6% and the average per room was $148.33. Jamaica is very close to John F. Kennedy International Airport, which explains why it is so attractive for travelers from other countries.
Put together, 248 hotel projects were developed in the outer boroughs since 2010. 120 were created in Queens, 90 in Brooklyn, 33 in the Bronx and 5 in Staten Island. This year in particular, thirty different projects were filed.
Nowadays, the landscape changed. People not only choose to lodge in the outer boroughs because it may be cheaper than staying in Manhattan, but also because the boroughs offer their own attractions. [The Real Deal]