New York City and San Francisco commercial real estate markets offer opportunity for hotels?
New York City’s commercial real estate market was hit hard, particularly in the office and retail sectors. Remote work, business closures, and reduced tourism led to increased vacancies and decreased rental income in office buildings and retail spaces. Some reports suggest that New York City has experienced one of the highest office vacancy rates in decades.
Like New York City, San Francisco is facing similar challenges. The shift to remote work and tech companies adopting long-term, flexible, or fully remote work policies have reduced demand for office space. San Francisco’s high cost of living and office rental rates have further contributed to the decline in commercial real estate income.
These challenged real estate markets may offer opportunity for select segments of the growing meetings and events space.
What meeting and event trends are reflected in these challenged real estate markets?
According to Knowland data, small events in these real estate depressed markets are growing in volume, but not in duration. Compared to 2019, New York City almost doubled the percent of events with 25 or less attendees for YTD April 2023 from 8% to 15% with the length of meetings staying stable at about 1.5 days. A similar trend in San Francisco shows small group share up from 8.9% of meetings to 13.1% with meeting length relatively steady at 1.8 days vs 1.5 days average.
Small Group Trends – less than or equal to 25 attendees (2019 vs April 2023 YTD)
|Market||% of 2019 Events||% of 2023 Events||2019 Avg Length||2023 Avg Length|
|New York City||8.0%||15.0%||1.5 days||1.5 days|
|San Francisco||8.9%||13.1%||1.8 days||1.5 days|
However, looking at the top 10 accounts meeting across geographies, small meetings have grown from 4.1% to 9.1% of events, while duration has doubled from 1.7 to 3.5 days average. Data shows that these depressed real estate markets are having shorter meeting time periods compared to the market overall.
Hotel Opportunity in Depressed Commercial Real Estate
Hoteliers, asset managers, and owners are getting creative with one of the greatest shifts in market activities. From the potential of new competition born from the co-work environments to the demand for a more personalized experience, the changes will force many to dodge and weave. This new space availability in the commercial real estate landscape may offer a unique opportunity to expand offerings and grow revenue in the right market environment.