North Castle officials may soon decide whether a developer should pursue a residential-only proposal for a key Armonk parcel after plans for a boutique hotel may be scrapped due to the cratering hospitality market.
Developer Frank Madonna, a principal for MADD Madonna LLC who has proposed several iterations of the application called Eagle Ridge containing a roughly 100-room hotel, apartments and townhouses, has scaled back the design to feature 94 two-bedroom age-restricted townhomes. The 32-acre parcel had been rezoned by the town in 2010 to an Office Business Hotel zone and is located on North Castle Drive. It was formerly part of IBM’s Armonk campus.
The project’s planning consultant, Patrick Cleary, told the Town Board last Wednesday that projections from the commercial real estate firm CBRE forecast a 52-percent falloff in the post-COVID-19 hotel business. That’s a far more daunting hurdle than following two other calamitous events during the past 20 years – the Sept. 11 terrorist attacks in 2001 and the 2008 Great Recession – which saw reductions of 7 and 17 percent, respectively, he said.
“That is an extreme impact to a real estate market and it’s one that is further impacted by the uncertainty of the economy,” Cleary said. “All of that has said to us our financial model has basically crumbled. It is no longer viable and at this point in time it is impossible to finance a hotel.”
Despite dark clouds immediately ahead for the hotel business, the housing market in the suburbs, including the 55-and-up demographic, is in high-demand mode since shortly after the onset of the pandemic, said Joshua Weissman, another principal for the development group.
“There is a market need in town for a townhouse product as it will allow current empty-nesters in the town to take advantage of this housing market and capitalize on the high demand and low inventory, and then have an option to downsize and stay in North Castle,” Weissman said.
Furthermore, there is even greater demand for age-restricted housing because that age group is also looking to get out of the more densely populated New York City area since the health crisis started, he said.
The property would need to be part of a floating zone district called Residential Multifamily Senior Citizen Housing to accommodate the housing units.
Madonna estimated that the units would measure about 3,300 square feet and be offered at a $1.3 million to $1.5 million sale price. They would also carry condominium taxation, he said.
Town Board members voiced skepticism about the proposal, pointing to several factors. Officials had been hoping to have a hotel in town, an attractive amenity, especially since Armonk is located near Westchester County Airport. It would also provide needed revenue through the hotel tax.
The town’s only lodging facility, La Quinta Inn on Business Park Drive, left town at the end of June.
Supervisor Michael Schiliro said while he appreciates the situation the applicant and his partners find themselves in, it could be shortsighted to make a long-term decision based on current conditions. He also pointed out that the zoning is in place for a hotel.
“We hope that there can be a hotel there, but we’re also cognizant of the market and the economy,” Schiliro said. “It doesn’t mean…you make a decision because of the economy.”
Weissman said with the demand in the age-restricted market, the townhouse plan could be turned around and built quickly and still be in demand.
“The project that we’re showing you now is something that we believe is going to be, not just in the next 12 months but in the next 18, 24 months, it’s still be to be a product that’s desirable as you see people exiting the dirty and congested cities and trying to move to the beautiful and bucolic suburbs,” he said.
Officials questioned several aspects of the plan. Councilman Jose Berra said he is concerned about residential density on the site, the potential visibility of the units from elsewhere in the hamlet and condo taxation, which he characterized as unfair for people who can afford units of up to $1.5 million.
With other projects in the hamlet having been approved or in the works, including Mariani Gardens, Brynwood and the old lumberyard, Berra also was concerned about congestion. However, he would also like to see the property developed.
“We do have that small-town feel and you worry about congestion and I think a lot of people worry about congestion,” Berra said. “But the balance against that is in some way I’d like to see, especially if the tax base, where in my view it’s appropriate as opposed to condos, I would like to see these alternatives being provided for people without having too much of an adverse impact on the property and the town.”
Councilwoman Barbara DiGiacinto shared a similar concern about density and also wondered whether 3,300 square feet for two bedrooms would be attractive for people looking to downsize.
“I’m just questioning how viable this proposal is (for empty-nesters),” she said.
In February 2018, Madonna had initially proposed a 97-room hotel as part of a four-story building with about 70 two- and three-bedroom apartments on the top two floors on one portion of the land and about 90 townhomes on the other side. By last summer, it reduced the hotel to 91 units.
In the Final Environmental Impact Statement (FEIS) submitted this spring, the proposed hotel was 115 units with a separate multifamily building and 50 age-restricted townhouses.
Schiliro said the board hopes to indicate to the applicant whether it believes the latest plan should be considered possibly as soon as next week.