Lower Manhattan’s Hotel Occupancy Rate Hits Record High as Office Leasing Stalls
By Isabelle Durso August 9, 2024 2:12 pm
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Hotel occupancy rates in Lower Manhattan have hit new highs so far this year, even as office leasing in the area stalls.
Downtown’s hotels boasted an occupancy rate of 89 percent in the second quarter of 2024, representing the neighborhood’s highest mark on record and a significant increase in both quarterly and yearly growth, according to a report from the business booster group the Alliance for Downtown New York.
It’s the highest occupancy rate since the Downtown Alliance started tracking hotel statistics in 2016 using data firm STR, a spokesperson for the Downtown Alliance said.
There are currently 8,498 hotel rooms across 43 total hotels in Lower Manhattan, with the average daily room rate during the second quarter also hitting a record high of $317.06, according to the report. No hotels opened in the second quarter.
“While the office market remains slow but stable, our hospitality sector has taken off, with record numbers of visitors filling up our Lower Manhattan hotels,” Downtown Alliance President Jessica Lappin said in a statement. “Tourism is back across the city but our hotels have eclipsed even the Midtown and citywide occupancy rates.”
Compared to 2022, the number of tourists visiting Lower Manhattan surged by 27 percent in 2023 as the area welcomed 9.4 million tourists during the year, Downtown Alliance said.
While Lower Manhattan’s hospitality and tourism industry has taken off, the area’s office market has hit a pause, with office leasing in the second quarter up only 1 percent over the first quarter. Overall, leasing still lags 25 percent behind the five-year average and 17 percent behind the post-pandemic average, the report found.
And more office space has left the market than entered due to residential conversions. To date, 696,000 square feet of office space has closed due to underperforming office properties being converted, according to the Downtown Alliance’s report. That includes major projects at 111 Wall Street and 222 Broadway.
But Lower Manhattan’s office market wrapped up the first half of this year on relatively stable footing, recording 589,000 square feet of new leasing in the second quarter, the report found. Subleasing accounted for 49 percent of all leases for the quarter.
The largest single lease during the period was from financial services and software company Stripe taking 147,509 square feet at 28 Liberty Street.
Isabelle Durso can be reached at idurso@commercialobserver.com.
