Lower Manhattan’s Trump Soho, the five-year-old tower that was seized in a foreclosure amid slow sales of its condominiums, may drop its focus on part-time residences and operate most of the property solely as a hotel.
The building’s new owner, Los Angeles-based CIM Group, is “stepping away” from marketing the roughly two-thirds of condos that remain unsold, said Gary Schweikert, the building’s managing director. The company is considering converting the unsold units at the tower permanently into hotel rooms, he said.
The 46-story building operates under a condo-hotel model that has struggled to find buyers since sales started in 2007. The property contains 391 units that may only be used by their owners for 120 days of a calendar year, a system put in place because of the neighborhood’s restrictive residential zoning laws, Schweikert said. For the rest of the time, they’re offered as hotel rooms, with owners sharing in the rental revenue.
“The highest and best use for this property, given the record visitor numbers in New York City and the zoning restrictions in that neighborhood, would be to use it as a straight-up hotel,” said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. and a Bloomberg View contributor. “This kind of repurposing would make a lot of sense.”
CIM Group took control of the building late last year after foreclosing on the original developers, Sapir Organization and Bayrock Group LLC. Donald Trump’s Trump Organization operates the hotel and licenses its name to the property, but doesn’t have an equity stake. Schweikert manages the hotel for Trump, and said he has been in meetings with CIM Group as the company evaluates the property’s future uses.
Bill Mendel, a spokesman for CIM, said the company wouldn’t comment on plans for the building.
“CIM is looking for change,” Schweikert said. “The zoning around the property has changed in the last five years. They are looking at what is the best use of the building.”
The unsold condos currently operate as hotel rooms. The building’s lodging operations have an 80 percent annual occupancy and average nightly rates of more than $500, according to Schweikert.
At the time the tower was being developed, zoning laws in Soho prohibited any residential construction in the neighborhood. The developers used the condo-hotel model to get around the restrictions by dubbing the property a “transient” hotel where owners aren’t full-time residents, according to Andrew Berman, executive director of the Greenwich Village Society for Historical Preservation.
Since 2013, new rezoning laws have been allowing for some residential construction “on certain sites that don’t currently have any commercial uses,” he said, indicating that the Trump Soho still couldn’t operate solely for residences.
CIM Group is considering a remodel of the Trump Soho’s common areas, such as possibly adding a second restaurant and retail space, Schweikert said. The building may also get a room revamp, which could include technology upgrades such as key-less room entry, he said.
The building faces competition from new hotels in New York’s trendy Soho. Two blocks west, the Hotel Hugo opened its doors in September. Billionaire John Pritzker’s Commune Hotels & Resorts is developing one of its boutique Tommie properties in the neighborhood.
Seventeen condo units at Trump Soho are currently listed for sale, with prices ranging from $825,000 for a studio to $50 million for a 10,000-square-foot (930-square-meter) presidential suite, according to property-listings website StreetEasy.com