Looks like a Condo, Acts Like a Hotel

November 16, 2012

By Marc Santora

Room service on demand froma a celebrity chef. A maid to make the bed with fresh linens every day and leave a chocolate on your pillow at night. An 11,000 square-foot spa an elevator ride away. All yours with the purchase of a luxury condo.

Nearly a dozen projects in and around New York City that offer perks like these have recently opened or are nearing completion.

For buyers, the concept of a home with all the comforts of a hotel may seem like paradise. But hotel services don’t come cheap: the developers of  condo-hotels plan to charge as much as 20 percent more per square foot than high-end competitors and don’t have hotel parteners.

And along with room service can come hotel-like bills, not to mention higher monthly maintenance fees. Financing can also be more difficult to secure; banks are leery of lending money for what could appear to be strictly investment property.

That is an open question, and one that hinges as much on the hotel business as the broader real estate market. Hotel occupancy has been steadily increasing in recent months, with 89 percent occupancy in August and average room state of $227, according to NYC & Company, the city’s official marketing, tourism and partnership organization.

But that is far from the more than $300 a night commanded by hotels before the economy flatered. There is also more competition now. In 2010, 21 hotels have opened, or will, across the city; that adds more than 6,700 rooms.

Of these projects, at least 10 include condominiums.

It is too early to draw any conclusions about their viability. Some have sold below initial expectations, while others have increased their prices since coming on the market. Prices for units in condo-hotels range from $300,000 to more than $18 million – $680 per square foot to nearly $4,000 – with yet more properties in the pipeline. The various projects are aimed at a wide range of consumers, from Manhattanites who are downsizing in cost but not comfort, to the foreigners for whom New York is a good buy right now.

But in their scale and abition, which real estate experts say is unlikely to be matched in coming years now that financing is so hard to shake loose, the condo-hotels are already having an impact. Brokers and developers say some strictly condominium projects are stepping up amenities partly in response to the condo-hotel phenomenon.

Solly Assa, the owner of Assa Properties, which developed the Cassa Hotel and Residences in Midtown, said that although the maily foreing buyers at this property were willing to pay $950,000 to $18 million for the condos, they were looking to save money on carrying costs. So the Cassa will offer many of hotel amenities “à la carte” instead of including them in the common charge. The lower monthly fees, starting about $1,200, are one reason the apartments have sold quickly, allowing him to raise prices three times already, he said.

Of the 57 residences for sale, 40 are in the process of closing, he said.

“We understand that it is a new era,” Mr. Assa said.

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