Westin San Jose hotel in downtown San Jose, located at 302 S. Market St.
San Jose - Hotel purchase activity cooled in northern California, even in the bay region, during the first six months of 2022, a depression that could worsen for the rest of this year, According to a new worrying report.
In the first six months of 2022, the volume in dollars for purchases of Northern Hotels in California totaled just under $ 1.03 billion, which represents a drop of 63.4% $ 2.8 billion in hotel agreements in the first half of 2021, according to a report published by Atlas Hospitality Group, which follows the accommodation market.
The Southern California hotel market experienced a 1.3% increase in the dollar volume of accommodation agreements, Atlas Hospitality reported. Southern California hotels obtained $ 2.42 billion in the first six months of this year, compared to $ 2.39 billion in the first half of 2021.
Northern California's weakness has dragged the state's results.
During the first six months of 2022, hotel purchases in California generated $ 3.45 billion in transactions, which was a large slide of 33.6% compared to the 5.19 billion record Dollars in hotels in the first half of 2021, Atlas Hospitality reported.
omination, the activity of purchasing hotels could immerse even more current levels, according to the report.
"While we are going to the second half, we plan a sharp decrease in sales," said Atlas Hospitality in his report.
It is likely that several factors depress the activity of purchasing the hotel in California, warned the hotel analyst.
"Interest rates have increased much higher in the last 60 to 90 days," said Alan Reay, president of Atlas Hospitality. "It has an impact on the price."
Hotel investors can generally find a variety of commercial real estate assets that are not hotels to buy, such as office buildings, research sites and industrial properties.
The growing interest rates mean that it becomes more expensive for buyers to borrow money to finance real estate purchases. This, in turn, means that monthly mortgage payments would increase for a property buyer.
It also means that the main means for a buyer to achieve a satisfactory rate in an investment in a commercial property is to convince the seller to assert the price of real estate. A principle similar to residential real estate purchases is applied, said Reay.
Another specter that has started to persecute the hotel sector is the increasingly amazing and uncertain economy in the Bay region, California and across the country.
"Landers and buyers analyze a potential slowdown in the economy and a potential recession," said Reay. “It makes lenders nervous. It gives nervous buyers. Lenders withdraw from the loan offer in hotels. »
In the bay region, the largest hotels offered in the first half involved a varied accommodation group, according to the report. Among the strengths of the first half of 2022:
-Hyatt Place, a hotel with 230 rooms just at the corner of the Oracle Park baseball stadium in the Chinese Basin de San Francisco, was bought for $ 142 million, or nearly $ 617,400 per room.
-Westin San José, accommodation from the center of San José in 171 rooms which, for decades, was known as Saint Claire Hotel, was bought for a total value of $ 62.3 million, or Over $ 364,300 per room. The price was 2.7% lower than the previous purchase before $ 64 million in 2017.
-Dawn Ranch Lodge, a 58 -room hotel in the city of Guerneville in the county of Sonoma which is part of the Russian River Resort area, was bought for $ 20.3 million, or $ 350,000 by room.
After the Coronavirus epidemic, hotels in leisure areas and stations such as the County of Sonoma, the county of Napa and the Count of Monterey, they depend mainly on trade trips.
Although it is in a vacation region, the purchase of Dawn Ranch Lodge is far from record prices which exceeded $ 2 million for three gigantic agreements for 2021 which imply a hotel perched on the big coast of on From the county of Monterey and two hotels in the land of wine.
The County of Santa Clara underwent significant weakness during the first half of 2022 compared to the same period of six months in 2021, the determined atlas hospitality.
"Investors had considered Silicon Valley as the place to have hotels, but now they take a different look at Silicon Valley," said Reay. "We always see a lot of remote work in the Silicon Valley, which means that business trips are less frequent" than before the start of the coronavirus.
Hotel purchases in Santa Clara Count
"There is certainly a change in San Francisco, with great decreases in the value of certain hotels," said Reay. underlined the purchase of the Marker Hotel in June 2022 for $ 77 million, which, according to Reay, said that it was bought in 2018 for 104 million dollars, a drop in value of 26% . Reay also said that another large hotel in San Francisco is in detention for a 30% price ceremony for its previous purchase. "Conventions have many options like Las Vegas," said Reay. "They should not be in San Francisco. People see that San Francisco has a big crime problem and problems with the lack of accommodation."
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