A ground lease tied to a 105-key boutique New York City hotel that’s about equal distance to both the tourist-and-entertainment hub of Times Square and Hudson Yards, the largest U.S. private development, has been put up for sale.
The broker considers the $17 million offering a rare bargain in the high-demand hotel market of Manhattan. And the buyer could potentially unlock a value estimated to be more than $1 billion if the property is to be redeveloped for mixed-use alternatives.
Real estate developer and hotelier Ian Reisner's Urban Resort is selling a 35-year ground lease, with 34 years remaining on the term, for the Hudson Yards Hotel at 510 W. 42nd St., according to Mitch Muroff, founder of his namesake hotel brokerage and advisory firm that’s marketing the listing exclusively.
The 78,000-square-foot property, featuring a private outdoor sun deck, also includes a 5,000-square-foot restaurant and a 10,000-square-foot nightclub and event space, Muroff said. The nightclub venue used to house a Playboy Club.
Reisner is the managing partner and president of Parkview Developers, the company he co-founded in 2000 that focuses on residential and hospitality development, according to Reisner’s LinkedIn page. Parkview’s projects have included the Carnegie Hotel off Columbus Circle and The Out NYC, a gay-friendly hotel that is no longer in operation.
Reisner, who acquired the Hudson Yards Hotel ground lease this year, is selling now because of medical issues, Muroff said, adding Reisner has “spent substantial amount of money” overhauling the property, including upgrades to its heating and cooling systems and renovating guest rooms.
The property has been approved by Hyatt Hotels to operate under its newly unveiled Unscripted by Hyatt brand of independent and boutique hotels, subject to a property improvement plan, Muroff said. Reisner hasn’t signed a contract on that yet in case a prospective buyer has a different plan. The restaurant and nightclub are clear of any long-term leases.
“A prospective buyer may be interested in owning and operating the restaurant and nightclub and the hotel,” Muroff said. “It would open the opportunity to have a truly urban resort.”
Cheaper option
The hotel attracts both leisure travelers as well as those coming to Manhattan for business, or a convention at the Jacob K. Javits Convention Center nearby, Muroff said. The property is also close to transit hubs including Penn Station and the Port Authority Bus Terminal.
“One of the things that makes this opportunity so special is it enables a new buyer to come to a location for 34 years with potential extension rights for a fraction of cost that it would cost to acquire a hotel if you were to buy the land and the building,” Muroff said. “A buyer can establish his own identity and can come with a new brand or with an established brand [or] can choose to be independent.”
The asking price of $17 million translates to about $160,000 per room. Muroff said it would cost a buyer about $750,000 a room if a new hotel building of the same caliber were to be developed or acquired.
Since he listed the ground lease for sale two weeks ago, Muroff said he’s received “very strong” interest with inquiries from hotel companies, hotel owners and owner-operators not just from the New York metro area but also globally from Europe and Asia.
“New York City is the premier hotel destination in America,” Muroff said. “It presents such an extraordinary opportunity for a hotelier to acquire a first-rate location in the capital of the world.”
The offering comes as New York has led the United States in a tourism rebound following the pandemic. Both the average 12-month revenue per available room and average daily rate in the city have reached record highs of about $276 and $328 each, according to CoStar data.
Record hotel rates
Through September, New York’s revenue per available room rose 6.3%, topping the 1.5% U.S. growth rate, according to a CoStar analysis. In the Midtown West and Times Square hotel market, the largest Manhattan hotel cluster and where the property sits, 12-month revenue per available room jumped 7.2% through September, driven by both business and leisure travel and other factors including increased office attendance requirements, according to a separate CoStar study.
The average daily rate in Midtown West and Times Square also has reached a record high of $356 with the revenue per available room at about $306, also a record, CoStar data shows.
The Hudson Yards Hotel has potential beyond being just a resort property. The prospective buyer has the option to add guest rooms or floors, subject to zoning, code compliance and the land owner’s approval, according to a memorandum on the lease offering.
The property sits on a 24,850-square-foot footprint with a “generous” zoning allowance of up to 310,000 square feet of buildable area, the offering document said, adding that presents “substantial opportunities for vertical expansion.”
The site may support residential, office or mixed-use alternatives that complement a hotel operation, the memo said. The property’s value is estimated to range from $14.5 million in its current leasehold state to as much as $1.17 billion under full redevelopment scenarios with additional air rights, according to the memo, citing a November 2024 CBRE appraisal.