Hotels in New York City that were accommodating illegal immigrants are being converted into residential facilities. This is the result of an overwhelming influx of immigrants that has pushed hotel operations to their limits, compounded by New York's chronic housing shortage.
On the 11th (local time), The Wall Street Journal (WSJ) reported, "New York City developers have seized an unusual opportunity: converting at least 12 hotels that were accommodating immigrants into new apartments," stating that "developers are already prepared to renovate existing hotel buildings into over 1,100 apartments."
The former Hilton hotel near JFK International Airport in Queens is being remodeled into affordable housing, while the Holiday Inn hotel in Manhattan is transforming into student housing for profit. In Midtown Manhattan, a developer is converting a hotel with 600 rooms into more than 500 residential units.
According to the New York City Hotel Association, only about 40% of the 160 hotels that were used as shelters for immigrants are resuming operations, while the remaining 60% are expected to be converted into hotels or other commercial facilities.
Since 2022, as numerous immigrants began pouring through the southern border, New York City has spent $8 billion (about 11 trillion won) to rent hotels to provide temporary accommodations until they decide on their next destination. The number of immigrants has increased exponentially, with more than 54,000 immigrants staying in New York City hotels early last year.
However, as the policy of accommodating immigrants in hotels led to increased tax burdens and urban blight, citizen discontent erupted, causing hotels to begin closing one after another. New York City Mayor Eric Adams declared a state of emergency, stating that "the immigrant issue will destroy New York City" and decided to reduce accommodations; currently, only the Row NYC, which has 1,331 rooms in Midtown, is being operated as immigrant lodging.
The conversion of hotels into dwellings is the result of several intertwined factors. Firstly, the housing shortage is so severe that it has become a key issue in this year's New York mayoral election. Rental prices in New York City have soared to all-time highs, and the vacancy rate stands at only 1.4%, indicating a critical supply shortage.
The WSJ noted, "This conversion is creating an opportunity to increase New York's housing supply," adding that "while the new residential facilities may not significantly alleviate the overall housing shortage in the city, developers expect that this movement will play a crucial role in revitalizing depressed neighborhoods by attracting new residents and invigorating local businesses."
Hotel owners find themselves in a difficult situation as they struggle to resume operations at hotels that are stigmatized as 'immigrant shelters.' Michelle Russo, CEO of hotel consulting company HotelAVE, said, "Hotel owners often prefer to sell or convert properties for more profitable uses rather than spend up to $100,000 per room to reopen."
For real estate developers, acquiring hotels that were accommodating immigrants at a low price and converting them into residential facilities is advantageous. Most hotels are located in convenient transportation areas and have bathrooms and large windows in each room, making renovations easier than other types of buildings.
Slate Property, a housing development company, finally acquired the JFK Hilton after reviewing over 50 properties that were suitable for residential renovation. David Schwartz, co-founder and CEO of the property group, stated, "Renovating a hotel takes more than half the time and costs less than building apartments from scratch."