Left: Hotel occupancy rates are at an all-time high due to the strong increase in tourism. Right: The high office vacancy rate remains largely unchanged and is 25% below the 5-year average. Photos: Carl Glassman/Tribeca Trib
Tourists are flocking to downtown hotels like never before, while the area’s post-Covid office rent slump remains largely unchanged.
These are two of the findings from the Downtown Alliance’s second quarter report on the condition of real estate in Lower Manhattan below Murray Street.
“While the office market remains slow but steady, our hospitality industry has seen a rebound, and our Lower Manhattan hotels are filled with record numbers of visitors,” said Jessica Lappin, president of the Downtown Alliance, in a statement. “Tourism is back across the city, but our hotels have eclipsed even the occupancy rates in Midtown and across the city.”
More than half of these tourists – 54% – come from other countries, mostly Western Europe, according to the Lower Manhattan Real Estate Market Report.
The second-quarter report shows downtown hotel occupancy at 89%, a record that is well above last year’s figures and even surpasses pre-pandemic levels. Average room rates also hit a record high of $317.16. No new hotels opened last quarter, but the Alliance expects four to be in the pipeline.
Vacant office space in Lower Manhattan remained roughly flat at nearly 24% in the first quarter, with just over a third of new leases signed by technology companies. Compared to the five-year average, office occupancy is down by a quarter.
As usual, Eating and drinking establishments dominated New retail store openings: 14 in total; opening of only one shopping location.
Not surprisingly, the news is positive for homeowners, who are getting an average rent of $4,655, “the second highest rent the district has ever seen,” according to the Alliance.
