Commercial Property; When Hotels Add Hospitality to History

WHEN his real estate broker told Philip Pilevsky in 1998 that the 24-story American Radiator Building was for sale, he barely hesitated before offering $15 million. The site, at 40 West 40th Street, is directly across from Bryant Park behind the New York Public Library in the heart of Midtown, making it ideal for the upscale hotel he had in mind. The Japanese company that owned the landmark office building accepted the relatively low price because at the time the Japanese had largely soured on American real estate and the American Radiator Building had been vacant for several years.

For Mr. Pilevsky, the prize was not only that the building has a prime location but also that it had been designed in 1924 by Raymond M. Hood, who also designed the Daily News and McGraw-Hill buildings. Moreover, the American Radiator Building was a designated landmark, which by definition confers status.

In the two months that the hotel, now named the Bryant Park, has been open, it has been full much of the time, according to Elon Kenchington, its managing director, and seems likely to continue to do well even after its current introductory rate of $295 a night rises to $500.

The cachet conferred by old buildings, many with architectural elements that would be difficult to replicate today, has long been part of the attraction of such grand hotels as the Plaza or the Waldorf-Astoria in Manhattan, just as a sense of place and history is inescapable at West Point's Hotel Thayer. The same attractions are part of the reason for the conversion of old buildings into hotels, a pattern that shows no signs of letting up. The following historic or landmark hotels have opened in Manhattan in the last 18 months:

* The Regent Wall Street, a blocklong 144-room hotel that opened at 55 Wall Street in December 1999. Originally built in 1842, it housed the New York Merchants' Exchange, the United States Custom House and, for almost 90 years, National City Bank (now Citigroup). For a brief while, the building was operated by the Cipriani family, which had been running a catering service and concert operation in the building's great hall. But nine months before the hotel opened, Sidney Kimmel, the owner of the hotel, chose Regent International Hotels, owned by the Carlson Companies of Minneapolis, to operate all aspects of the property.

According to its architects, Anthony Morali and Michael Gadaleta of M. G. New York Architects, the Regent's vault is the room most requested for meetings, for up to 12 people. And its eight pre-Civil War jail cells, with dirt floors and arched ceilings, are occasionally open to groups that request tours, according to Christopher Knable, the general manager.

* The 108-room Dylan Hotel at 52 East 41st Street, a 1903 Beaux-Arts building that was once the home of the Chemists' Club and for which the Dylan's owner, Morris Moinian, said he had earmarked $30 million for renovation, including $1 million for such architectural details as its three-story marble winding staircase.

* The Muse, a former manufacturing loft, now a 200-room hotel at 130 West 46th Street, whose original triple-arched limestone and brick facade has been restored.

* The 270-room, 20-story W hotel at Union Square at 201 Park Avenue South (17th Street), formerly the Guardian Life Building, built in 1911.

What has been happening in New York is also happening throughout the United States. In communities across the land old houses, factories, bank buildings, schools, post offices and railroad stations are in growing demand as hotels or apartments.

''We've definitely seen more historic and landmark buildings being restored as hotels in recent years, rather than just torn down,'' said Mary Foley Billingsley, a spokeswoman for the National Trust Historic Hotels of America. From 32 member hotels in 1989, when it was founded, the organization now has 171. Some of the buildings have been hotels since they were built, but others had been plantation houses, inns, private residences, taverns, even hunting retreats.

A quarter of the 40 properties in the Omni Hotels group are historic or landmarks. And the company has allocated more than $200 million for the recent renovation and restoration of its San Francisco and New Orleans properties as well as the Parker House in Boston (which claims to be the longest continuously operated hotel in America), the venerable Shoreham Hotel in Washington and the former William Penn Hotel in Pittsburgh.

Within the past two years, Marriott's Ritz-Carlton brand opened a hotel at a 101-year-old former department store in New Orleans, while Marriott's Courtyard brand transformed a Riggs bank in Washington into a hotel, restored a former molasses factory in New Orleans and opened a hotel in a City Hall annex in Philadelphia. Other notable buildings that have been transformed into hotels in Philadelphia recently include a former bank and office tower designed by McKim, Meade & White, now a Ritz-Carlton, and the modernist landmark Philadelphia Savings Fund Society Building, which is now the Loews Philadelphia Hotel.

''I think part of what's going on,'' said William J. Higgins, a partner at Higgins & Quasebarth, a Manhattan based firm that specializes in preserving historic and landmark properties, ''is that just as the world is becoming Americanized, America is becoming Europeanized -- at least to the extent of restoring and reusing old buildings, rather than just knocking them down.''

And, he said, ''Americans have also come to realize that preservation is part of our economic well being.''

Mr. Higgins added that the typical office building is rather easily converted into a hotel, because usually only their main lobbies and elevator lobbies on the upper floors tend to be landmarked or otherwise worth preserving.

Converting historic buildings can entail complicated calculations. If the building being converted has been designated a landmark by the city, there will be considerable additional expense in meeting the requirements of local landmark regulations. For many hotel owners, however, the landmark designation carries considerable cachet and usually translates into higher room rates.

Hotels and other public buildings on the National Register of Historic Places must be at least 50 years old, and their owners must refrain from altering the architecture. But the designation makes owners eligible for a reduction of the federal income tax they owe, equal to 20 percent of the cost of the rehabilitation.

PROFESSOR RICHARD PENNER, who teaches at the School of Hotel Administration at Cornell University, said old buildings had been turned into modern hotels for decades, including many that were hotels to begin with but had been allowed to become rundown. While New York, Chicago, Philadelphia and Los Angeles still have many such buildings, there are also examples in smaller cities like Providence, Hartford and Burlington, Vt.

West Point's historic Hotel Thayer, an imposing five-story granite building that resembles a medieval fortress, reopened 17 months ago with 150 rooms after a $26 million rehabilitation by Hudson River Partners, a Washington company made up entirely of West Point graduates. Next year, according to Charles Barren, managing director of the Thayer, construction is scheduled to start on a second phase that will increase total capacity to 250 rooms. Some small function rooms that were added to the main building in the 1960's will be replaced. The four-story annex added in 1946 will be replaced by a free-standing five-story tower that will contain a conference center, business center, new restaurant, lounge, 6,000-square-foot ballroom and a fitness center.

In the initial phase, the hotel's stone facade entrance, which had been enclosed by glass since the 1960's, was restored. ''It took us about 12 months to do the historic preservation,'' said Douglas P. Bennett, the general partner of Hudson River Partners, a 1964 graduate of West Point and a Vietnam veteran. ''But all of us were aware of what the hotel meant to us and to West Point, and now that restoration is used as a case study within the Department of the Army for what you can do with a military installation.'' While Hudson River Partners has a long-term lease on the hotel, the Army owns the land beneath it.

In some cases, local authorities eager to have a landmark hotel restored or upgraded are happy to extend a helping hand to hotel companies. For example, the 305-room Omni New Haven Hotel at Yale, at 155 Temple Street, two blocks from Yale University across the New Haven Green, is not a historic building but has become something of a local landmark. Michael Deitemeyer, Omni's chief operating officer, said the state of Connecticut gave Omni $10 million toward the $30 million it spent to restore a 25-year-old hotel on the site that had been closed for about five years. Since the hotel reopened in 1998, ''it has done very well for us,'' Mr. Deitemeyer added.

The Applied Development Company of Hoboken, N.J., a contractor and developer, primarily of multifamily residential properties, expects to do well with its first venture into a heritage hotel -- the early 20th century mansion in Morristown, N.J., of Theodore N. Vail, the first president of the American Telephone and Telegraph Company. The municipality of Morristown bought the mansion in 1922 for government offices, and Allied Development, which plans to put up a 101-room luxury hotel, bought it from the town for $2 million.

''We're obliged by our agreement with Morristown to restore it back to its historic standards,'' said Michael I. Barry, a principal in the 31-year-old family company.

This will entail restoring the lobby and lounge to their original condition, while adding a guest house in the rear that will not alter the facade. The design architect is Brennan Beer Gorman, and Dewitt Tishman is the construction architect. Moreover, the company has already hired a preservationist to make sure that each detail is done exactly as required by Morristown and the state.

Hotel owners and developers often differ about whether it is more economical (if one can use that word to describe multimillion-dollar properties) to buy an existing building and convert it or to build from the ground up. While restoring an old building may save as much as 40 percent in construction costs, the cost of equipping old buildings with the health clubs, spas, restaurants and the wiring necessary for the high-tech equipment that guests expect in high priced hotels can more than wipe out any anticipated savings. In addition, the time and material needed to duplicate the original buildings can be very high.

Omni's $22 million restoration at its William Penn hotel in Pittsburgh includes $3 million just to repoint the bricks. In the case of the Bryant Park, Mr. Pilevsky spent $35 million in addition to the $15 million purchase price.

The biggest part of that, of course, was overhauling the rooms and much else of the interior, almost none of which was landmarked, and the cost of hotel's overall architectural design, which was done by David Chipperfield, a British architect. Still, Mr. Pilevsky estimated that the restoration of the facade, including the black brick of the hotel's tower and its terra-cotta ornaments, added ''at least $2 million to $3 million more'' than it would have cost had the building not been a landmark. Even at that, he added, there were certain things he wanted but was prohibited by regulations from having. ''We wanted bigger windows,'' he said, ''but you learn to live with not having them.

Architects and preservations says they are sometimes surprised by what they find during restorations. Such was the case during the current $15 million makeover of the Waldorf Towers, the 70 year-old ''hotel within a hotel'' that has a dedicated separate entrance and lobby, despite occupying the 28th through 42nd floors of the Waldorf-Astoria on 50th Street between Park and Lexington Avenues.

IN adding to the 18th floor 13 contiguous meeting rooms and recreating the Art Deco splendor of the Starlight Roof, workers made what Waldorf officials said was a significant discovery: details that had been covered over in previous alterations of the hotel's public places, including arched ceilings with grill work in the center.

''We are uncovering incredible vintage architectural details that have been lost during the past 50 years of successive waves of modernization,'' said Pamela Graber, the executive director of the Towers.

Somewhat similarly, in their renovation of the Regent Wall Street, Mr. Morali and Mr. Gadaleta, the architects, were also often surprised. Above the flat ceiling of the building's arcade, Mr. Morali said, they found a hidden dropped ceiling, and when they removed that, they found a vaulted ceiling. Additionally, when they analyzed the paint on the ballroom ceiling, through a process known as photo microscopy, in order to determine the age and condition of paint, they were in for another surprise.

''When we did the initial analysis, we found layers of blue paint,'' Mr. Gadaleta said, ''but the ceiling now is beige with gold trim. And there's a gold leaf on the main dome in the center of the ballroom ceiling.

''So we're going to bring in conservators to analyze the paint, to further bring it back to its original color.''

Although he could just as well have been speaking about the Waldorf Towers or many other restorations for that matter, Mr. Morali said, ''When you find these discoveries, you feel like an anthropologist.''