Small Hotels a Non-Starter After Zoning Change in New York City

"The M1 Hotel Text Amendment adopted by City Council last December, which requires a special permit for the construction of hotels in most light manufacturing zones, was widely expected to have a chilling effect on hotel development in New York City," reports Kevin Sun.

"An analysis by the The Real Deal of Department of Buildings filings for new hotels has found that while developers are continuing to plan larger hotel projects at a rate comparable to historical levels, new plans for smaller hotels have suddenly become rare."

Less than rare, in fact—in the beginning of 2019, new hotel developments with fewer than 70 rooms were completely non-existent. On June 13, a developer broke the streak by submitting plans for "a 61-key, six-story hotel at 3294 Atlantic Avenue in East New York, Brooklyn," according to Sun.

Before the zoning change went into effect, a spate of development proposals were submitted—the fruits of which are still under construction around the city. Meanwhile development of larger hotels has continued at a steady clip, before and after the change. 

According to Sun, the effect is exactly what the union behind the M1 Hotel Text Amendment, the New York Hotel and Motel Trades Council, expected.