|Globally, Manhattan among the top-five hotel investment markets.|
Friday, 2nd May 2014
Source : JLL's Hotels & Hospitality Group
Manhattan was the most active hotel investment market nationally in 2013, with total hotel transaction volume of $1.8 billion in 2013, Manhattan liquidity outranked that of Oahu Island, San Francisco, Los Angeles, Boston and Washington, DC.
Transaction volume in Manhattan is expected to range from $2.7 to $2.8 billion in 2014, significantly above volumes observed in 2013.
The Manhattan hotel market is the strongest RevPAR performer among the top-25 U.S. hotel markets with a 25% RevPAR premium over the next highest market. In 2013, Manhattan’s upper-tier hotels posted a RevPAR increase of 4.3% over 2012 levels.
Over 6,400 hotel rooms will be added to the Manhattan market in 2014, increasing the market’s room inventory by 8%. With close to 15,000 new rooms anticipated to enter the market between 2014 and 2016, Manhattan has more rooms under construction than any other U.S city.
Despite the robust supply pipeline, based on historical trends, these rooms are expected to be absorbed relatively quickly. The market’s upper-tier hotels are expected to achieve RevPAR growth of 3% to 3.5% in 2014, driven largely by rate growth.
$17 billion in hotel transactions since 2000
To summarize Manhattan hotel transaction volume in the early 2000s, from 2000 to 2003 transaction levels averaged approximately $300 million annually.
Liquidity jumped to $1.8 billion in 2004 as RevPAR turned positive for the first time since 2000 and leverage started to expand.
In 2005, deal volumes totaled $1.6 billion.
Annual transaction volume in 2006 surged to $2.8 billion and reached $2.9 billion in 2007. Transaction volume declined in 2008 and 2009 due to the economic downturn, with total volume decreasing to $500 million in 2009.
However, liquidity returned in 2010, with investment volume increasing to $1.6 billion.
2011 marked the return of investors seeking to acquire assets priced below replacement cost. With debt becoming increasingly available for Manhattan deals, total investment volume boomed at $3.5 billion—an all-time high.
In 2012, Manhattan hotel transaction volume moderated to levels consistent wit h the second and third most active years on record (2006 and 2007).