Kensico Properties has filed an application with the Department of City Planning to rezone 509 Madison Avenue in Midtown Manhattan for a hotel conversion, according to Crain’s. The plan would see the current 21-story office building transformed into a 30-story hotel with ground-floor retail space.
The proposed project includes 96 hotel rooms, a lobby, and amenity spaces across 139,000 square feet. Retail space would occupy 3,300 square feet and have its own entrance separate from the hotel. Current tenants include Banyan Tree Capital Management, Yellowstone Capital Partners, and Kensico itself. If the conversion moves forward as planned, these tenants are expected to vacate since no office space will remain in the building.
In 2017, Kensico attempted to sell its leasehold interest in the property despite high occupancy rates at that time. The leasehold was not sold.
No representatives from Kensico or other parties involved commented on the rezoning application.
If approved and completed, the new hotel would join competitors such as Omni Berkshire Place, Lotte New York Palace, and Hotel Elysee in Midtown.
New York City’s hotel sector has recently outperformed national averages on key indicators. In the first half of this year, average weekly occupancy reached 82 percent and revenue per available room averaged $238.93 per night (https://www.costar.com/article/1915486692/new-york-city-hotel-occupancy-rate-outpaces-national-average).
Recent changes in city policy have impacted hotel development. A bill passed by the City Council in 2021 requires special permits for new hotels, which has slowed construction of new properties (https://www.nyc.gov/site/planning/plans/hotel-special-permit/hotel-special-permit-overview.page). Additionally, enforcement against unregistered short-term rentals began two years ago; platforms are blocked from processing payments for hosts who lack city registration or approval for rentals under 30 days (https://www.nyc.gov/site/specialenforcement/short-term-rentals/registration.page).
