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Flatotel Closes, Will Be Converted to Luxury Condos

By Alan Neuhauser | February 27, 2013 12:48pm | Updated on February 27, 2013 1:37pm

MIDTOWN — The investment duo slated to buy the Sony building in Midtown for $1.1 billion purchased a shuttered luxury hotel earlier this month, a 46-story property they reportedly plan to convert to high-end condos.

Investors Joseph Chetrit and David Bistricer bought the Flatotel, on West 52nd Street near Seventh Avenue, for about $180 million in early February, according to a report by Crain’s.

The hotel, which housed 289 rooms and Moda Restaurant, was foreclosed upon by three investment groups after the building’s owner, the Alexico Group, defaulted on debts against the property.

The Alexico Group and the investment groups did not return calls and emails for comment. Crain’s reported that the condo property is slated to open in about 18 months.

Chetrit and Bistricer’s decision to convert the hotel to condos represents a wider trend in the Times Square area, Times Square Alliance president Tim Tompkins said.

“We've seen way more residential development,” he told DNAinfo.com New York, pointing to a December 2011 study by the consulting firm HR&A Advisors, which found that since 2004 there’s been a 15 percent increase in the number of households in and around the neighborhood.

“It signals that more and more people see Times Square as not only an entertainment district, but also as a place to live,” Tompkins said.

“It reflects the ongoing evolution of Times Square as a friendlier, safer and more comfortable place to be. And it also fuels something that we're interested in seeing, which is a more diverse retail environment that serves New Yorkers as well as visitors.”

The rise in residential space has occurred even as new and expanded hotels brought 2,000 more hotel rooms to the Times Square area since 2006, according to a report by HR&A.

Flatotel’s closure and sale, however, does not mean “there’s a glut” of hotel rooms, Tompkins emphasized.

“Even though we're losing a few hotel rooms, in the context of the growth, [269 rooms is] a drop in the bucket,” he said.

“Even though we've added a lot of hotel rooms, there's been a huge increase in tourism over the last eight or nine years as well. And in fact, there's such a demand for hotel rooms that overall in this city, there's still going to be more hotel growth…. There will be a continuation in people building hotel rooms in the entertainment district in New York. I don't see this as a counter trend.”