NYC Sets Record with $3.5B in Hotel Transactions in 2011

NEW YORK CITY—After two strong rebound years, the volume of hotel transactions in New York reached an all-time record high in 2011.

Eighteen transactions, comprising nearly $3.5 billion in assets traded, represent a 150 percent increase over 2010 volume, according to preliminary numbers from Jones Lang LaSalle Hotels’ Hotel Intelligence New York report. Approximately 50 percent of the city’s acquisition volume was driven by real estate investment trusts in 2011. The firm’s hotel transactions experts predict 2012 will bring much the same as New York is expected to remain the most active hotel transaction market in the United States.

Key metrics contributing to New York’s place as the top ranking global market for hotel transactions in 2011 and 2012 include:

*New York’s hotel transaction volume in 2011 represented more than 20 percent of the total United States transaction activity.

*Based on assets in various stages of the disposition process, hotel deal volume in New York City is expected range from $2.2 billion to $2.6 billion in 2012, representing approximately 15 percent of Americas total transaction volume. While this pace represents a softening on the record 2011 levels, New York is expected to continue to be the most liquid hotel market in the world.

*Private equity, institutional and off-shore buyers are poised to dominate the hotel acquisition landscape in Manhattan. The city will continue to be one of the most attractive hotel investment markets for public REITs. As such, when liquidity returns to the public markets, REITs will once again turn to New York for acquisition targets.

*Room supply is expected to increase by 3.4 percent with 17 new hotels totaling 2,700 new rooms expected to deliver in 2012.

During 2011, Manhattan was the most liquid city for hotel transactions across the globe, and drew the attention of investors due to its track record of resilience. London, Singapore, San Diego and Paris rounded out the remaining top five markets in terms of hotel transaction volume in 2011, each achieving more than $1 billion in transactions.

Approximately a dozen single asset hotel transactions are expected to close in New York in 2012.

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