Roosevelt Hotel May Fetch $1B in Sale After Migrants Move Out: Sources
City’s Announcement Spurs Interest in Prime Manhattan Site
The city’s announcement that it would move migrants out of the Roosevelt Hotel by June has made the precious East Midtown site a hot topic among commercial developers.
Pakistan International Airlines Seeks to Sell Property for $1 Billion
The property’s owner, Pakistan International Airlines (PIA), wants to sell the hotel for what sources said could be $1 billion. A developer could tear down the antiquated hotel to build a skyscraper of up to 1.8 million square feet on the roughly 42,000 square-foot parcel, sources said. A project so large would need to exploit recent area rezoning, which raised the maximum floor-to-area ratio (FAR) from 15 to 30, available only if a developer provided transit and public-space improvements and amenities subject to city and MTA review.
Developer Interest Heats Up
PIA’s sale agent, JLL, has yet to issue a formal solicitation, which will likely happen in the spring. However, market sources told Realty Check that “informal conversations of interest” have taken place with developers including Tishman Speyer, Related Companies, SL Green, and Vornado.
Roosevelt Site’s Potential
The Roosevelt site takes up the full block bounded by Madison and Vanderbilt avenues between East 45th and East 46th streets. A new tower would enjoy direct access to Grand Central Terminal. Its skyscraper neighbors would include the nearly finished JP Morgan Chase headquarters and SL Green’s One Vanderbilt.
New Tower Plans
A new tower might combine offices, a hotel, and retail. A buyer would need to pay a substantial termination fee to the Hotel Trades Council/Local 6 union, even if the project didn’t include a hotel, as per its contract with the hotel’s owners.
Timing is Right for Sale
JLL has represented PIA since early last year, but its role was limited as long as the city’s $220 million Roosevelt lease remained in effect. Now that the city has exercised an option to end the lease with four months’ notice, the hotel site has become the hottest potato in the Manhattan building scene.
PIA’s Motivation
PIA is eager to unload the site to help alleviate the airline’s and the government’s cash crunch. The Jerusalem Post, which monitors Pakistani finances closely, last week called the lease termination “a major financial setback” for PIA. The Islamabad government is under pressure to meet terms of a $7 billion IMF bailout agreement.
Convenience and Challenges
“Any development plan would have a lot of moving parts,” an investment-sale specialist noted. “A buyer has to make a deal with the union. Their proposal has to go through ULURP. They need to find an anchor tenant. You’re looking at a three-to-five-year process.”
Hotel’s Future Uncertain
Reopening the Roosevelt as a hotel short-term wasn’t likely, an industry source said – “It was not in great shape before the migrants came and God knows what it’s like now.” Tens of thousands of migrants, not all of them legal and some with criminal records, have lived there for nearly two years.
Conclusion
The sale of the Roosevelt Hotel has the potential to be one of the largest real estate deals in New York City’s history. With a prime location and a massive potential for redevelopment, the site is sure to attract significant interest from developers.
FAQs
* What is the potential value of the Roosevelt Hotel site?
+ The site could fetch $1 billion in sale.
* Who is interested in buying the site?
+ Developers including Tishman Speyer, Related Companies, SL Green, and Vornado have expressed interest.
* What is the current use of the site?
+ The site is currently home to a hotel, which will be vacated once the city’s lease ends in June.
* What is the potential redevelopment plan for the site?
+ A new tower could combine offices, a hotel, and retail, with a potential floor area ratio of up to 30.
