Armonk Hotel, Residential Development Plan Proposed Near IBM

A developer has drawn up plans for a hotel and more than 160 residential units on 32 acres in Armonk that IBM sold last year.

Representatives for local developer Frank Madonna, one-half of the entity MADD Madonna Armonk, LLC that is pitching the idea, made a pre-submission presentation last week to the North Castle Town Board detailing a mixed-used building containing a 97-room hotel with amenities on the first two floors and 69 one-, two- and three-bedroom apartments on the third and fourth stories.

The hotel, which would feature a mid-sized banquet room that could hold 150 to 200 guests and a conference center, and the rental units would be built on a six-acre parcel that IMB had subdivided and obtained a zoning change to allow for the construction of a hotel in 2010.

The larger 26-acre parcel would feature 94 three-bedroom attached and semi-attached townhouses each measuring between 2,600 and 2,800 square feet and containing three bathrooms. There would be a common entrance to the site off of North Castle Drive with an internal road branching off in each direction to the two parcels.

Representatives for the developer said the tax revenue the project would generate for the town and its proximity to downtown would make the development an attractive project. The site is bordered by IMB’s campus, the town’s Community Park and Route 22.

“It’s also a wonderful site because it has no immediate residential neighbors,” said architect Gregg DeAngelis. “It’s not going to have an impact on other residential neighborhoods. It will really have a minimal impact to others in the community.”

DeAngelis said above the hotel there would be 44 one-bedroom rental apartments between 800 and 1,000 square feet each, including four affordable units, and 15 two-bedroom units, ranging in size from 950 to 1,400 square feet. Two of the 15 two-bedroom apartments would be affordable.

The remaining apartments, the 10 three-bedroom units, would all be affordable housing to satisfy the town’s requirement that 10 percent of new construction project have affordable housing.

Although the town’s Comprehensive Plan calls for up to a 300-room hotel, research conducted by the potential applicant’s team revealed that development costs are too high to make a full-service hotel feasible, said Jonathan Falik, CEO of JF Capital Advisors, which studied the issue.

In today’s market a hotel operator would need a $100 average daily rate for every $1,000 of development costs, Falik said.

Between down time for lodging facilities from December through February and slow nights during the week, the developer would need at least a $335 average daily rate per room for a 300-room hotel at the site, he said.

Other models, including a roughly 120-room boutique facility or a 145-economy proposal, would only provide marginally better returns.

“The apartments in the building are a driver of profit to the developer,” Falik said. “Otherwise, it would be break even or not profitable at all.”

He said that because of development costs there is very little full-service hotel stock in the market. Some facilities have been repurposed but there has been relatively little new construction.

The site, a little more than three miles from Westchester County Airport, would also not generate enough of a return. Falik said once travelers are in a car the difference between staying in Armonk and White Plains, where there is plenty of lodging about eight miles from the airport and near mass transportation, is not a large enough distance to make an impact.

“It’s nice, it’s a good driver to have the airport, but it’s not a game changer,” he said.

DeAngelis said preliminary plans call for the hotel to have 60 to 70 parking spaces in front and 300 to 320 spaces on two levels below grade.

No estimates were provided regarding additional potential tax revenue for developing the acreage. Last year North Castle also approved a 3 percent hotel occupancy tax that would add that percentage of all hotel bills to the town’s coffers.

Town Supervisor Michael Schiliro said while there are many issues to delve into during a full review, it’s an intriguing proposal that merits consideration. He said there would have to be extensive evaluation of the residential component, particularly the proposed placement of the affordable units required for the townhouses to the adjacent parcel where the hotel and rental units are located.

“It’s always nice to see developers and investors want to invest that type of money in our town,” Schiliro said.

Attorney Kory Salomone, representing the developer, said his client would have to go through the state Environmental Quality Review Act process. He anticipates a formal submission to the town in about a month.