Metaphor on 23rd Street

The Chelsea Hotel has history and architecture—is that enough for a $100 million sale?

Two punks pushing middle age, a man and a woman dressed in black, sat together on a bench in the lobby of the Chelsea Hotel on the afternoon of Oct. 29. The room was decorated for Halloween.

Near the couple’s feet, three plastic tombstones and some fake bones were arranged beneath a black-and-white photograph of Andy Warhol operating a camera, part of the lobby’s permanent collection.

The couple was on vacation in New York City, and the Chelsea was their last stop. Ten days earlier, the hotel’s owners—a group of 16 shareholders led by the descendants of three Hungarian men who purchased it in 1946—announced that, after years of bad publicity, abortive management changes and dozens of lawsuits, the icon was for sale. 

The man wore a black leather jacket covered in zippers and two oversize metal rings. His hairline receded into long sideburns. “It doesn’t exist anymore. They made it into a suite or something,” the man told the woman. He was talking about Room 100, now part of Room 103, where Sex Pistols bassist Sid Vicious allegedly stabbed his girlfriend, Nancy Spungen, to death in October 1978. “I loved her, but she treated me like shit,” he told police when he was arrested. He killed himself with three injections of prime heroin later that year. “Please bury me next to my baby in my leather jacket, jeans and motorcycle boots,” he wrote in a suicide note that was found in his pocket. “Goodbye.”

The woman in the Chelsea lobby pulled her straight, jet-black hair into a bundle over her left shoulder. Her face was white with powder. “This has been a bad-luck trip,” she said.

The Chelsea sits fortress-like on 23rd Street, between Seventh and Eighth avenues. When the 12-story building opened in 1883, as a 44-room co-op apartment house, it was the tallest in New York. The Chelsea isn’t named after the neighborhood; the neighborhood is named after the Chelsea.

In 1905, it began accepting transient hotel guests, and over the next century, the original rooms were split into 101 apartments—a mix of single-room occupancies and one-, two- and three-bedrooms—and 125 hotel units. Patti Smith, who moved into the hotel with Robert Mapplethorpe in 1969, described the Chelsea as “a doll’s house in The Twilight Zone” in her recent memoir Just Kids (Ecco, 2010).

When other 19th-century hotels like the original Waldorf and the Astoria were being knocked down in the late 1920s, the red-brick Chelsea remained. “It was a boutique hotel before they thought up the name,” said Tom McConnell, a broker at the commercial real estate firm Cushman & Wakefield.

The Chelsea’s hulking physicality—its L-shaped sign, which can be seen blocks away hanging over 23rd Street; its facade, speckled with terraces—sets the building apart from nearby neighbors such as Burritoville, 99¢ Creation and Pet Central. But it’s the litany of cultural touchstones in (or formerly in) residence that makes it the Chelsea.

It’s where Mark Twain stayed. And Jack Kerouac. And: Thomas Wolfe, Frida Kahlo, O. Henry, Arthur C. Clarke, Willem de Kooning, Henri Cartier Bresson, Allen Ginsberg and Martha Graham. It’s where couples from Arthur Miller and Marilyn Monroe to Leonard Cohen and Janis Joplin made love. It’s where Dylan Thomas collapsed into a coma in 1953—“I’ve had 18 straight whiskies. I think that is a record!”—which led to his death four days later in St. Vincent’s Hospital.

Upon arriving in New York City in 1964, artists Christo and Jeanne-Claude stayed in the Chelsea and borrowed money from the front desk to eat. The hotel became known for allowing tenants to pay rent with original works of art, some of which still hang in the lobby. The idea of the Chelsea as a place where beautiful young people took “downies,” smoked cigarettes and groomed their bangs crystallized in Warhol’s 1966 film The Chelsea Girls. In the year before the movie was released, Bob Dylan, who had written much of Blonde on Blonde while living in a third-floor room, moved out of the building. “When Chelsea Girls came out, it was all over for the Chelsea Hotel,” Dylan said in a 1985 interview. “You might as well have burned it down. The notoriety it had gotten from that movie pretty much destroyed it.”

Although there is really no previous transaction to measure the sale of the Chelsea against, the owners are hoping the Queen Anne–style building, whose history and lore shriek like marketing banshees, will fetch at least $100 million, according to several sources.

Doug Harmon, a top broker at the firm Eastdil Secured, is representing the owners. Harmon repped the families that sold the Apthorp on the Upper West Side in 2006 to Maurice Mann and Lev Leviev for $425 million, then a record for a U.S. apartment building. Harmon is also handling the potential sale of 111 Eighth Ave. to Google, which has its New York headquarters there, for $2 billion in what could be one of the most expensive property sales ever in New York. Harmon declined to comment.

Finding a buyer for the Chelsea, especially at $100 million, is a giant problem. According to one source inside the building, hoteliers Ian Schrager and André Balazs, as well as the real estate scion Scott Resnick, the sort of buyer who might favor a residential repositioning of the building, have said they are not interested in the property. They all declined to comment.

The timing of the sale and the Manhattan hotel market are not the problem. The market is ripe. Hotel revenue per available room is up 15 percent in 2010 over 2009, and nightly occupancy rates have climbed back above 90 percent this year. There were more than 2,000 hotel rooms under construction or planned in Chelsea in the summer of 2007, and, in spite of the economy, no fewer than 10 new hotels have opened in the neighborhood since the beginning of 2009.

One source intimately familiar with the Chelsea and the local hotel market suggested the building could have gone for twice or three times as much as $100 million three years ago. The source also said that a new owner would probably spend between $50 million and $75 million (between $400,000 and $600,000 per hotel room) renovating the property.

A broker who toured the property recently estimated that the renovation would cost between $100,000 and $150,000 per room. Another broker who toured it and declined the listing said $100 million was “a stretch.” Eastdil Secured’s listing underscores the size of the existing hotel rooms, which a new owner could subdivide to create more revenue-generating units.

“The limiting factor is how much is it going to cost to renovate. If it’s $20,000 or $30,000 a room, that’s one thing, but if it’s $200,000 per room, that’s another thing,” said McConnell of Cushman & Wakefield. “It starts getting a little dis-economic at that location.”

There is also the headache of renovating a landmarked building, not to mention one whose central design feature—an open central stair—is now illegal in New York City (fire doors have been installed). And then there are the litigious tenants, who will have to be won over—or kicked out.

“To me, the Chelsea without the tenants isn’t really the Chelsea,” McConnell said. “I mean, if there’s one hotel in New York that you have to sprinkle a grain of salt on when it comes to tenants, it would be that one.”

Down a set of black stairs to the right of the hotel’s entrance is a club that opened in the middle of October, the Chelsea Room. “This is all the original brickwork from when the building was built in the 1800s,” said Marcus Bifaro, the club’s general manager, moving his finger in an arc across the lounge’s walls and vaulted ceiling, which were sandblasted for two weeks to remove layers of accumulated paint.

“The Chelsea Hotel, it’s an artistic place, obviously,” Bifaro said. “To tie myself to the Chelsea Hotel, I feel like we also ourselves have to be kind of artistic, not only in our design but putting up some pieces of art. That’s my next step.”

The Chelsea Room hopes to attract the type of clients who will pay for bottle service or, at the very least, $13 cocktails. Bifaro has made sure to stay on good terms with the hotel and the residents, who were largely unhappy with the Star Lounge, which closed in the same space earlier this year.

He beamed when asked if he was excited to be managing a club at the bottom of the Chelsea. But what of the sale? “There’s a million Trump Plazas, there’s a million boutique hotels out there somewhere, and I definitely don’t think that’s what they should do. I think they should leave it for what it is.”

On the night of Oct. 30, Bifaro, like many of his guests, dressed in costume. “I was going for Gangs of New York, but I ended up as this disco cowboy thing,” Bifaro told The Observer, popping a puffy cap onto his head. He wore a fake mustache and a vest with a pocket watch over his rolled shirtsleeves.

The club had a drink special for $10: vodka, Chambord raspberry liqueur, lime juice and cranberry juice, on the rocks and garnished with a slice of blood orange.

Behold the “Sid and Nancy.”

Suggested Next Read

Scrutinize for-profit colleges before enrolling

Personal Finance

Scrutinize for-profit colleges before enrolling

By Kathy Kristof, Tribune Media Services

Krystle Bernal spent three years studying fashion design, and she’s got $80,000 in loans to prove it. But you’d never know it by what she does. She’s a part-time bank teller. “I wanted to be a fashion buyer,” she said. “They told me I could earn $65,000 a year.” After finishing a three-year program at Westwood College, a for-profit university in Denver, Bernal was rejected for job after job by hiring managers who told her she wasn’t qualified.



Optimization WordPress Plugins & Solutions by W3 EDGE