This is what the city is calling the “Lower Concourse” area of the South Bronx; it includes the north side of the Mott Haven and the South Side of Morrisania.
This 30 block area of the South Bronx was recently part of the New York City Department of Planning rezoning plan. Due to its proximity to the waterfront, this area has traditionally been zoned for industrial and warehousing use. Most of the current residential housing stock in the lower Bronx was built in the 1970’s and 80’s when the city attempted to recoup population loss in this area, however development has slowed since most available lots were not currently zoned for residential…until 2009.
Check the rezoning plan here
Check the NYCEDC South Bronx initiative here
Currently there are several development sites planned for this area and it was recently announced that a site at 335 Grand Concourse (at 140th Street) with nearly 30,000 SF of buildable space is under development as a planned luxury hotel. It would be the first of such development for this area, and is meant to be an accommodation alternative to serve the court/business district of Grand Concourse as well as nearby Yankee Stadium patrons.
Lets say say it costs an additional $50/sf to remediate the environmental issues of the site (and there are a few see here) and $300/sf to develop so $376/sf in all, total development cost would be $11,280,0000.
ADR (Average Daily Rate) for the Bronx as of today for a mid-range hotel was estimated at $200/night for the 75 planned rooms on the site.
Vacancy rate 20%, Operating Expenses about 40% of GPI (Gross Potential Income).
In its SIMPLEST form, assuming a cap rate of 6.5% at the end of the 1st year of stabilized income, we are looking at a potential value of $33 Million.
I love the idea of bringing deals like this to South Bronx, there is so much potential there…