CBRE forecasts continued strong performance for Manhattan hotels

There will be continued strength in operating metrics and the Manhattan hotel investment sales market, according to the winter 2012 snapshot of the Manhattan hotel real estate market issued by Los Angeles-based CBRE Group.

“Manhattan hotel investment sales rebounded significantly in 2011, and 2012 is expected to be a strong year as well,” said Bradley Burwell, senior associate, CBRE Hotels. “Fundamental lodging performance remains strong, and despite the addition of more than 4,100 units in Manhattan in 2011, occupancy remained constant at 84%, clearly showing that the city can continue to absorb new supply.”

Key findings in this report include:

  • Manhattan hotel investment sales activity rebounded significantly in 2011; 27 hotels traded for a total of US$3.8 billion, more than double 2010 volume.
  • Manhattan hotel investment sales transaction volume will remain high in 2012, as fundamental lodging performance stays strong and the capital markets continue to improve.
  • Manhattan hotel capitalization rates are expected to be stable at historically low levels, as investor demand remains high.
  • CBRE Econometric Advisors (CBRE EA) forecasts in 2012 the New York metro region hotel occupancy rate will increase 60 basis points to 81%; ADR will increase 4.5% to US$243; and RevPAR will increase 5.4% to US$197.
  • By comparison, CBRE EA forecasts that in 2012 national hotel occupancy will remain constant at 65.9%; ADR will increase 3.8% to $123; and RevPAR will increase 3.8% to $81.
  • Despite the addition of more than 4,100 units in Manhattan in 2011, RevPAR still increased 5.6% to US$232; occupancy remained constant at 84%; and ADR increased by 5.7% to US$276.