Hotel at Brooklyn’s Pierhouse for sale? Conflicting reports
BHA: Sale may impact need to build Pier 6 towers
The controversial Pierhouse hotel/condo complex in Brooklyn Bridge Park is not yet completed, but a report of a possible sale of the hotel portion of the mega-structure has raised questions in Brooklyn Heights.
The Real Deal reported on June 23 that Starwood Capital Group has put 1 Hotel Brooklyn Bridge, the taller, hotel portion of the complex, up for sale. Selling now would allow the firm to “capitalize on the market and focus on third-party management,” sources told The Real Deal.
One concern of residents of Brooklyn Heights is the possibility that, once sold, the hotel units could be converted to condos, increasing the number of permanent residents and adding more stress to area schools, roads and other infrastructure.
Such a conversion is not without precedent. In 2004, the Elad Group converted part of the Plaza Hotel to condos. Anbang Insurance Group, the Chinese owner of the Waldorf Astoria, also hopes to convert up to 1,000 hotel rooms to condos.
A person familiar with the issue told the Brooklyn Eagle on Tuesday that Starwood Capital has informed Brooklyn Bridge Park that it is not actively marketing the property at this time, however. (The Eagle has reached out to Starwood for comment but did not hear back by press time.
Starwood is under a 93-year lease that does not permit a change in use to condo, according to the source. They may sell that lease after the hotel opens, but it can only be to certain qualified buyers (those with demonstrably adequate financial resources and appropriate experience).
In addition, Starwood Hotels (a separate entity) is under a long term contract to manage the property as a hotel – so any change in ownership of the lease would not affect its operation as a hotel.
The Brooklyn Heights Association (BHA) said on Tuesday that selling the hotel would bring profit sharing funds to the park, raising questions about the necessity of moving forward with two residential towers at Pier 6.
Peter Bray, BHA’s executive director, commented in a statement that the rumored sale “can only reflect the high value of this property of which Starwood Capital is now seeking to take advantage.”
“The Brooklyn Bridge Park Corporation has admitted that it has a profit sharing interest that is triggered when the Hotel is sold, but has refused to place any value on that interest in determining whether it needs any additional revenue from development on Pier 6 because it was allegedly too hypothetical,” Bray said. He added, “Certainly the possible sale of the 1 Hotel renders that interest much less hypothetical. Its potential sale would reinforce the BHA’s contention that the Brooklyn Bridge Park Corporation has substantially underestimated its projections of revenue it will receive from the existing developments in the park and further substantiates the BHA’s claim that it makes no sense to move forward with two massive residential towers on Pier 6 until all of the already existing revenue sources are clarified, including the Department of Finance assessments of Pierhouse, John Street and Empire Stores early next year.”
According to Toll Brothers, which is marketing the condo portion of the complex, residents of Pierhouse will have access to “all of the amenities of the eco-luxe 1 Hotel, an entirely new concept in the hotel industry …”
Pierhouse, near Pier 1 in the park, partially disrupts the view of the Brooklyn Bridge from the Brooklyn Heights Promenade, angering neighborhood advocates who had negotiated a lower height limit for the development and the wider community. In September 2015, a Brooklyn judge dismissed a suit by the advocate group Save the View Now (STVN), which claimed the park misled the public about the height of the project.
STVN’s Steven Guterman told the Eagle that any potential sale would have no impact on another suit brought by the Brooklyn Heights Association and STVN concerning the residential section of the Pierhouse complex, which the groups say infringes on the protected Scenic View District.
“Any buyer will know the building is involved in a lawsuit and will likely get some level of protection,” he said on Tuesday.
STVN and BHA are awaiting the judge’s decision in that case.
According to The Real Deal, Starwood Capital Group is looking to sell all three hotels in its 1 Hotels brand, including one by Central Park and one in Miami.
The 10-story, 194-room 1 Hotel Brooklyn Bridge is slated to open later this year. The Real Deal sources estimate the Central Park hotel to fetch north of $1 million per room, and the Brooklyn Bridge Park hotel to raise about $800,000 per room.
Payments in Lieu of Taxes (PILOTS) from the Pierhouse and other park developments are to be directed towards park maintenance rather than the general city budget.
Updated July 6 with a statement from the Brooklyn Heights Association.
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