NEW YORK—It’ll be a new year and a new way of thinking about real estate for Lexin Capital Founder/President Metin Negrin come 2017.
The seasoned investor is making his foray into the hotel space with the debut this winter of the Hyatt House New York/Chelsea, considered the extended-stay brand’s flagship.
Slated to open in January, the 150-key, 30-story hotel located on 28 St. and Sixth Ave. in Manhattan’s Flower District, also marks the brand’s entry into NYC.
It will be managed by Maryland-based Real Hospitality Group (RHG), which in 2014, opened the nearby 122-room Hyatt Herald Square.
Negrin, whose company has concentrated on commercial and residential space in its 14 years of investing, developing and managing, originally was headed in those directions when acquiring the prime Midtown site from a bank five years ago.
“We were going to do residential; that was our first business plan. But the previous owners of the property had a hotel (an Aloft) planned… So, we thought if they considered a hotel, maybe we should look into that as well,” said Negrin, whose first step was to hire Jones Lang LaSalle to consult on the project’s potential in the market.
“After the study, it turned out the extended-stay segment within the hotel world was interesting in terms of supply/demand for Midtown Manhattan. It was relatively easy for us to get convinced because the way we looked at it from a residential bias is it’s basically super-small apartments that are being rented 30 days at a time, instead of one-year leases,” said Negrin. “It’s made it a lot easier for us. We didn’t think of it as a huge leap from residential.”
The accommodations, averaging 340 sq. ft., include studio and one-bedroom units; 60 of the spaces connect and half the inventory has kitchenettes featuring stainless-steel appliances.
The new-construction building is designed by Nobutaka Ashihara Architect PC and includes an indoor rooftop fitness center. Negrin noted the gym was originally in the basement. “I said: ‘We can’t do this.’ You want to have an uplifting experience, not in an area where there are no windows. So, we decided to put it on the top floor and have a very special place.”
Aware of the trend toward rooftop bistros, Negrin said there is additional space on the roof as well as on the ninth floor that may be suitable as food and beverage operations are finessed.
“We haven’t done huge planning on the food and beverage budget so far, but we may consider that in the future,” said the investor.
The hotel’s second floor will showcase F&B outlet H Bar, which will offer the brand’s complimentary Morning Spread breakfast. In the evening, the space transforms into a lounge atmosphere with adult beverages and an accompanying menu.
The ground floor will feature 2Beans, a chocolate and espresso shop and a 24-hour H Markct that will provide grab-and-go items as well as provisions for those utilizing the kitchenettes.
Retail space for lease also is located at the street level
Lexin Capital reviewed some five hotel brands before selecting Hyatt.
“We wanted to have a brand and we wanted to have a franchise because we knew we had that lack of experience. We didn’t even think for one minute to do this without a brand,” said Negrin.
The hotel also needed a management company, and after vetting a half-dozen firms, brought on RHG, which found the project appealing on a number of fronts, said RHG President/CEO Ben Seidel.
“The location couldn’t be better. The building’s design, the extended-stay concept…make this a billboard for the brand second to none. As if this wouldn’t be appealing enough, the opportunity to work with Metin Negrin and Lexin Capital, and to further our partnership with Hyatt Hotels, is exciting in itself,” he said.
While Hyatt House is modeled as an extended-stay property, Negrin expects a significant amount of transient business from the market as the hotel is proximate any number of high-profile attractions such as the Empire State Building, Madison Square Garden, Macy’s and the trendy Chelsea neighborhood itself.
“It’s location, location, location. We’re in the heart of Midtown South, which has been the strongest office sector in the city. We call it Silicon Alley. We’re quite close to Google headquarters. We think we’ll get a lot of that traffic,” said Negrin, adding the Fashion Institute of Technology and the city’s flower markets are on the hotel’s doorstep.
“We have some bookings already for next year, February onward, which feels good,” said Negrin.
Seidel acknowledged the hotel would be launching in what is traditionally a slow period for hotels in The Big Apple.
“Historically, the first quarter of the year is the softest in New York City. That said, the softness is due mostly to reduced average room rates,” said Seidel. “Occupancies in New York last year for the first quarter for this market and chain class were 83.6% versus 91.5% for the full year, a difference in occupied rooms of only 8%. Although a relatively minor deficit, an opening this time of year will enable the team to ‘gel’ and work out the issues that inevitably rise and challenge any opening team.”
Negrin said one of the surprises of becoming a “newbie” hotelier stemmed from the FF&E aspect of the project. “It was more complicated than we initially thought. [It’s something] you don’t have in a regular residential development; you finish your kitchens, bathrooms and you’re done. You don’t have to worry about all the plates, the towels, the sheets, the furniture. And the whole sizing of furniture as well… There was a lot of detail to go through.”
So would he do another hotel?
“Yes, we would. It’s challenging but we’re not afraid. It’s fun when it kind of comes together and you go: ‘Wow. Remember that certain piece of furniture that we changed from 26 in. to 14 in.? Look how well it fits!’ I think overcoming challenges is satisfying, which we like,” said Negrin. HB