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Craig Deitelzweig made his mark in real estate by buying office buildings and making them look and feel like hotels. "Why shouldn't you feel like you're on vacation when you're at work?" he asks. His redevelopment of the offices at 10 Grand Central is evocative of a chic, boutique hotel with a signature scent pumping through its ducts.
He's done this at properties around the city, but now that tourism is in tatters and hotels sit empty and in danger of default, the chief executive of Marx Realty is looking at a new strategy: buy up cheap hotels and turn them into offices.
As a result of the pandemic, not all of the city's 700 hotels will make it, and some 25% are expected to close by 2023, experts say.
"Anybody who is in the market today is looking for ways to make sense of it," said Woody Heller a co-head of the capital markets division at Savills. In some cases, he said, conversions make the most sense.
Rooms for rent
At the low point earlier this year, hotels could fill only 15% of the city's roughly 128,000 rooms, according to analytics firm STR. The number of rentable rooms has dropped by a third since then to 85,000 now that more than 100 hotels have shuttered temporarily. The Roosevelt, the Marriott East Side, the AKA Wall Street and a consortium of Times Square hotels are among those that have closed permanently.
More than 60 others have offered their space for alternative use on a temporary basis, including the Upper West Side's Lucerne Hotel, which is housing homeless people and is at the center of a hot debate between neighborhood residents and the city over how long the people should stay. The W Hotel in Union...