Long a Holiday Inn, the West 57th Street property was reinvented as a boutique getaway in 2017 by a new owner, BD Hotels, whose portfolio includes downtown hot spots like the Mercer, the Bowery and the Jane. But then Covid hit, and BD defaulted, despite turning much of the Watson Hotel into a homeless shelter, for which the city reimbursed it.
For the 1964 building’s newest chapter, Yellowstone will turn one of the hotel’s two towers into market-rate apartments, according to sources familiar with the deal, while leaving the other tower as a hotel. Isaac Hera, the firm’s chief executive, said in an email that plans were not set yet, but added that “having the flexibility of implementing different uses and different business plans is a very attractive proposition.”
City and state officials have pushed for the conversion of hotels into affordable housing, but developers note that building codes could make that difficult.
For starters, apartments must be at least 150 square feet, while hotel rooms are allowed to be smaller. And apartments require kitchens, though in some affordable-housing complexes, tenants can share kitchen facilities, said Mark Ginsberg, a principal at Curtis + Ginsberg Architects, which has designed affordable projects.
Adding kitchens and enlarging rooms to meet codes could also ultimately reduce the number of beds, a counterproductive move, Mr. Ginsberg said. It could also balloon costs, turning a standard hotel makeover with $3 million in cosmetic changes into a $30 million overhaul.
The process seems so daunting that an investor interested in converting a struggling 60-room hotel on the Lower East Side is getting cold feet, said Mr. Ginsberg, who is assessing the site for the investor.
Since last spring, Mr. Ginsberg has looked at about a half dozen other hotel sites for similar clients. “With the destruction of the tourism industry, this is the time to act,” he said.